Question

Plum Republic is an upscale retail clothing store that sells clothes for professional working women. The store expects sales of $10 million for the year. Plum’s customers have lodged recent complaints about the quality of the clothes and service received while shopping at Plum Republic. Consequently, management recently implemented a quality improvement program and after several months accumulated the following data:
Costs of returning poor-quality clothes to manufacturers ..... $90,000
Employee training for buyers and salespeople ......... $15,000
Inspections of new merchandise ............. $30,000
Lost sales ............................... $100,000

Required
A. What are the total prevention costs?
B. What are the total appraisal costs?
C. What are the total internal failure costs?
D. What are the total external failure costs?



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  • CreatedMarch 11, 2015
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