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
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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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
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