Classifying quality costs and using these costs to make decisionsClason, Inc. manufactures door panels. Suppose Clason is considering spending the following amounts on a new total quality management (TQM) program:RequirementsClassify each cost as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost.Should Clason implement the new quality program? Give your reason. Strength-testing one item from each batch of panels$ 68,000Training employees in TQM27,000Training suppliers in TQM39,000Identifying suppliers who commit to on-time delivery ofperfect-quality materials58,000Clason expects the new program would save costs through the following:Avoid lost profits rom lost sales due to disappointed customers$ 86,000Avoid rework and spoilage63,000Avoid inspection of raw materials57,000Avoid warranty costs15,000

Prevention Costs = Training Employees in TQM + Training suppliers in TQM + Identifying suppliers who…

Answered: Strength-testing one item from each…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter14: Quality And Environmental Cost Management

Section: Chapter Questions

Problem 4CE: Nabors Company had actual quality costs for the year ended June 30, 20x5, as given below. At the...

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Classifying quality costs and using these costs to make decisions

Clason, Inc. manufactures door panels. Suppose Clason is considering spending the following amounts on a new total quality management (TQM) program:

Requirements

Classify each cost as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost.
Should Clason implement the new quality program? Give your reason.

Strength-testing one item from each batch of panels
$ 68,000
Training employees in TQM
27,000
Training suppliers in TQM
39,000
Identifying suppliers who commit to on-time delivery of
perfect-quality materials
58,000
Clason expects the new program would save costs through the following:
Avoid lost profits rom lost sales due to disappointed customers
$ 86,000
Avoid rework and spoilage
63,000
Avoid inspection of raw materials
57,000
Avoid warranty costs
15,000

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