61. The monthly budget for process F shows the following input/output analysis:
INPUTS
Description                        Comment                                                           Weight (kg)                    $
Materials                                                                                                             1,000                    (50,000)
System costs          Labour, utilities and other overheads                              –                         (30,000)
Total                                                                                                                     1,000                    (80,000)
OUTPUTS
Description                      Comment                                                            Weight (kg)                     $
Good output         Expected good output is 70% of input                            700                       84,000
and can be sold for $120 per kg
Waste                    Expected waste is 10% of input and must                     100                       (1,000)
be scrapped at a cost of $10 per kg
Scrap                      Expected scrap is 20% of input and can                        200                         3,000
be sold for $15 per kg
Total                                                                                                                    1,000                      86,000
Monthly profit is thus expected to be $6,000.
The company is looking at introducing new quality systems that will increase system costs by $5,000 per month but will reduce waste from 10% to 4% of input. Scrap is expected to stay at 20% of input.
What would be the impact on monthly profit of implementing the proposal?