A company intends to install new management software for its warehouse.The software will cost $50,000 to buy and will cost an additional $150,000 to install and implement.It is anticipated that it will save the company $45,000 through reductions in staff and $65,000 in general inventory costs in the first year after installation.What is the benefit to the company in the first year if they choose to install the software?
A)$45,000
B)$90,000
C)$110,000
D)$180,000
E)$65,000

Question

Quizplus · Accepted Answer

The benefit to the company in the first year can be calculated as follows:

Total cost of software = $50,000 + $150,000 = $200,000
Total savings in the first year = $45,000 + $65,000 = $110,000
Benefit to the company = Total savings - Total cost = $110,000 - $200,000 = -$90,000

Since the result is negative, it means that the company will actually incur a cost of $90,000 in the first year after installation. Therefore, it might not be the best choice to install the software in this case.

A Company Intends to Install New Management Software for Its