Classifying quality costs and using these costs to make decisionsKane manufactures high-quality speakers. Suppose Kane is considering spending the following amounts on a new quality program: Additional 20 minutes of testing for each speaker $ 620,000 Negotiating with and training suppliers to obtain higher-quality materials and on-time delivery 410,000 Redesigning the speakers to make them easier to manufacture 1,350,000 Kane expects this quality program to save costs, as follows: Reduce warranty repair costs $ 225,000 Avoid inspection of raw materials 540,000 Avoid rework because of fewer defective units 800,000 It also expects this program to avoid lost profits from the following: Lost sales due to disappointed customers $ 940,000 Lost production time due to rework 278,000 Requirements1. Classify each of these costs into one of the four categories of quality costs (prevention, appraisal, internal failure, external failure).2. Should Kane implement the quality program? Give your reasons.

Classifying quality costs and using these costs to make decisions Kane manufactures high-quality speakers. Suppose Kane is considering spending the following amounts on a new quality program:...

Classifying quality costs and using these costs to make decisions

Kane manufactures high-quality speakers. Suppose Kane is considering spending the following amounts on a new quality program:

Additional 20 minutes of testing for each speaker	$ 620,000
Negotiating with and training suppliers to obtain higher-quality
materials and on-time delivery	410,000
Redesigning the speakers to make them easier to manufacture	1,350,000

Kane expects this quality program to save costs, as follows:

Reduce warranty repair costs	$ 225,000
Avoid inspection of raw materials	540,000
Avoid rework because of fewer defective units	800,000

It also expects this program to avoid lost profits from the following:

Lost sales due to disappointed customers	$ 940,000
Lost production time due to rework	278,000

Requirements

1. Classify each of these costs into one of the four categories of quality costs (prevention, appraisal, internal failure, external failure).

2. Should Kane implement the quality program? Give your reasons.

Answered Same DayDec 24, 2021

Answer To: Classifying quality costs and using these costs to make decisions Kane manufactures high-quality...

David answered on Dec 24 2021

130 Votes

Prevention
cost
Appraisal cost Internal
failure cost
External
failure cost
Redesigning the
speakers to make
them easier to
manufacture.
Additional 20
mins to test the
product
Negotiating with
and training
suppliers to
obtain high
quality and on
time delivery.
Inspection of raw
materials ...

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Classifying quality costs and using these costs to make decisions Kane manufactures high-quality speakers. Suppose Kane is considering spending the following amounts on a new quality program:...

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