Data table Predicted Activity Cost Reduction in Allocation Rate Activity Activity Units per Unit Inspection of incoming materials 300 $ 21 Inspection of finished goods 300 $ 36 Number of defective units discovered in-house ...... 3,300 $ 15 Number of defective units discovered by customers 850 $ 40 Lost sales to dissatisfied customers 320 $ 56 Tyco y Corp is using a costs-of-quality approach to evaluate design engineering efforts for a new toy nobot. The com Next question pers expect the enginesing work to reduce appraisal, internal failure, and extemal failure activites The predicted reductions in activities over the two-year she of the toy robot fotow. Also shown are the cost allocation rates for the activite (Click on the icon to view the information.) Read the requirements Requirement 1. Calculate the predicted quality cost savings from the design engineering work Activity Predicted Reduction in Activity Costs Inspection of incoming materials Inspection of finished goods Number of defective units discovered in-house Number of defective units discovered by customers Lost sales to dissatisfied customers Total predicted quality cost savings Requirement 2. The company spent $50,000 on design engineering for the new toy robot. What is the net benefit of this "preventive quality activity? Lass: Net benefit of of design engineering Requirement 3. What major difficulty would management have had in implementing this costs-of-quality approach? What alternative approach could it use to measure quality improvement? Activity Inspection of incoming materials Inspection of finished goods Number of defective units discovered in-house Number of defective units discovered by customers Lost sales to dissatisfied customers Total predicted quality cost savings Measuring the cost of engineering is difficult. Measuring the cost of inspection activities is difficult. Predicted Reduction in Activity Costs for the new toy ro Measuring the cost of quality related activities is difficult. in implementing this What alternative approach could it use to measure quality improvement? Requirement 2. The company spent $50,000 on design engineering for the new toy robot. Wha Focus only on financial measures of quality. Monitor competitors' measures of quality and continuously try to improve them. Monitor nonfinancial measures of quality and attempt to improve them. sts-of