Question

Christianson Corp. manufactures radiation- shielding glass panels. Suppose the company is considering spending the following amounts on a new TQM program:
Strength- testingone item from each batch of panels.......................... $ 68,000
Training employees in TQM................................................................ $ 24,000
Training suppliers in TQM.................................................................... $ 33,000
Identifying preferred suppliers that commit
to on- time delivery of perfect quality materials................................ $ 55,000

The company expects the new program would save costs through the following:

Avoid lost profits from lost sales due to disappointed customers.............................. $ 95,000
Avoid rework and spoilage.......................................................................................... $ 67,000
Avoid inspection of raw materials................................................................................ $ 50,000
Avoid warranty costs.................................................................................................... $ 19,000

Requirements
1. Classify each item as a prevention cost, an appraisal cost, an internal failure cost, or an ­external failure cost.
2. Should the company implement the new quality program? Give your reason.



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  • CreatedAugust 27, 2014
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