Classify costs and make a quality-initiative decision (Learning Objective 5) Sinclair Corp. manufactures radiation-shielding glass panels . Suppose Sinclair is consider- ing spending the following amounts on a new TOM program : Strength-testing one item from each batch of panels ......................... . Training employees in TOM ................................................................. . Training suppliers in TOM .................................................................... . Identifying preferred suppliers that commit to on-time delivery of perfect quality materials ................................................................... . Sinclair expects the new program to save costs through the following: Avoid lost profits from lost sales due to disappointed customers ....... Avoid rework and spoilage ................................................................. .. Avoid inspection of raw materials ........................................................ . Avoid warranty costs ..................... ................................. ...................... . $63,000 $27,000 $39,000 $52,000 $93,000 $64,000 $52,000 $19,000 Requirements 1. Classify each item as a prevention cost , an appraisal cost, an internal failure cost, or an external failure cost . 2. Should Sinclair implement the new quality program? Give your reason .
Classify costs and make a quality-initiative decision (Learning Objective 5) Sinclair Corp. manufactures radiation-shielding glass panels . Suppose Sinclair is consider-
ing spending the following amounts on a new TOM program :
Strength-testing one item from each batch of panels ......................... . Training employees in TOM ................................................................. . Training suppliers in TOM .................................................................... . Identifying preferred suppliers that commit to on-time delivery of
perfect quality materials ................................................................... .
Sinclair expects the new program to save costs through the following:
Avoid lost profits from lost sales due to disappointed customers ....... Avoid rework and spoilage ................................................................. .. Avoid inspection of raw materials ........................................................ . Avoid warranty costs ..................... ................................. ...................... .
$63,000 $27,000 $39,000
$52,000
$93,000 $64,000 $52,000 $19,000
Requirements
1. Classify each item as a prevention cost , an appraisal cost, an internal failure cost, or an external failure cost .
2. Should Sinclair implement the new quality program? Give your reason .
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