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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

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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

  1. Classify each cost as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost.
  2. 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
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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