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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
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.

Transcribed Image Text: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
Expert Solution
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