Question

Crabby’s Seafood Restaurant is a family-owned restaurant that has been around for many years and takes pride in its fresh fish and quality ingredients. However, over the past year, Crabby’s has had increasing numbers of complaints from customers about the quality of service received and the quality of the food served, and the company was even sued for food poisoning. Bill Crabby, the restaurant’s owner, accumulated the following data related to the restaurant’s product quality and service quality over the last year:
Costs of compensating customers for unsatisfactory meals .....$ 7,000
Employee training for cooks and wait staff ...........$15,000
Food poisoning liability lawsuits ................$20,000
Cost of remaking entrees ...................$10,000
Inspection of incoming ingredients ...............$ 5,000
Spoilage and waste from discarding poor-quality food ........$ 2,500
Lost sales .........................$15,000

Required
A. Compute total prevention costs.
B. Compute total appraisal costs.
C. Compute total internal failure costs.
D. Compute total external failure costs.



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  • CreatedMarch 11, 2015
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