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

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

Requirements

1. Classify each of these costs into one of the four categories of quality costs (prevention, appraisal, internal failure, or external failure).
2. Should Loiselle implement the quality program? Give your reasons.
3.   

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Additional 20 minutes testing for each speaker Negotiating and training suppliers to obtain higher-quality materials and on-time delivery Redesigning the speakers to make them easier to manufacture Loiselle expects this quality program to save costs as follows: Reduce warranty repair costs Avoid inspection of raw materials Avoid rework because of fewer defective units $ 625,000 430,000 1,250,000 $ 275,000 580,000 825,000 Additional 20 minutes testing for each speaker Negotiating and training suppliers to obtain higher-quality materials and on-time delivery Redesigning the speakers to make them easier to manufacture Loiselle expects this quality program to save costs as follows: Reduce warranty repair costs Avoid inspection of raw materials Avoid rework because of fewer defective units $ 625,000 430,000 1,250,000 $ 275,000 580,000 825,000

Answer rating: 100% (QA)

ANSWER Classification of costs Prevention Costs i Negotiating and training suppliers to obtain highe... View the full answer