Maurice Tutor

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    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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    Phoniex University
    Oct-2001 - Nov-2016

Category > Management Posted 30 Jan 2018 My Price 9.00

Kane manufactures

Classifying quality costs and using these costs to make decisions

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

Additional 20 minutes of testing for each speaker

$ 620,000

Negotiating with and training suppliers to obtain higher-quality

materials and on-time delivery

410,000

Redesigning the speakers to make them easier to manufacture

1,350,000

Kane expects this quality program to save costs, as follows:

Reduce warranty repair costs

$ 225,000

Avoid inspection of raw materials

540,000

Avoid rework because of fewer defective units

800,000

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

Lost sales due to disappointed customers

$ 940,000

Lost production time due to rework

278,000

Requirements

1. Classify each of these costs into one of the four categories of quality costs (prevention, appraisal, internal failure, external failure).

2. Should Kane implement the quality program? Give your reasons.

Answers

Maurice Tutor
(5)
Status NEW Posted 30 Jan 2018 11:01 PM My Price 9.00

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