Gluck Metal Works stamps sheet metal into blanks that are used in a variety of c

Question

Gluck Metal Works stamps sheet metal into blanks that are used in a variety of consumer products. The average cost for sheet metal is $80 per ton. Gluck's waste disposal company charges $70 per ton to dispose of manufacturing waste. The stamping process currently employed by Gluck generates an average of 170 tons of waste per month. Gluck has developed a new system that would increase the efficiency of its stamping process.

The new system has an annual cost of $50,000, but would reduce stamping waste by 50%, the remaining waste would be sold to a recycler for $35 per ton.

What is the net savings if Gluck implements this new system?

A. $210,100 B. $260,100 C. $142,800 D. $35,700

Explanation / Answer

Average waste per month under current process = 170 tons

Disposal charges for the waste = $70 per ton

Disposal Charges for the month = 170 tons x $70per ton

= $11900

Disposal charges for the year = $11,900 x 12

= $142,800

Net saving if Gluck implements the new system = $142,800

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