Chihooli Corp. manufactures radiation-shielding glass panels. (Click the icon to

Question

Chihooli Corp. manufactures radiation-shielding glass panels. (Click the icon to view the information.) Requirements 1. Classify each item as a prevention cost, an appraisal cost, an internal failure cost, or an extenal failure cost. 2. Should Chihooli implement the new quality program? Give your reason. Requirement 1. Classify each item as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost. Type of Quality Cost Cost Data Table Strength-testing one item from each batch of panels Training employees in TQM Training suppliers in TQM Identifying preferred suppliers who commit to on-time delivery of perfect quality materials Avoid lost profits from lost sales due to disappointed customers Avoid rework and spoilage Avoid inspection of raw materials Suppose Chihooli is considering spending the following amounts on a new TQM program: Strength-testing one item from each batch of panels.... . . . . . ..$ 66,000 Training employees in TQM Training suppliers in TQM Identifying preferred suppliers that commit to on-time delivery of perfect quality materials Chihooli expects the new program to save costs through the following: $ 50,000 Avoid lost profits from lost sales due to disappointed customers Avoid rework and spoilage .. . . . . . . .$ 69,000 Avoid inspection of raw materials ...._......... . .$ 56,000 Avoid warranty costs Avoid warranty costs Requirement 2. Should Chihooli implement the new quality program? Give your reason. implement the new quality program. The program would the company Chihooli $ 23,000 PrintDone

Explanation / Answer

prevention and apprisal costs are incurred to prevent defects. internal and external costs ar eonce reason for any defect occured
1)Apprisal costs
2)Prevention costs
3)Prevention costs
4)Prevention costs
5)External failure costs
6)internal failure costs
7)Apprisal costs
8)External failure costs

2)Cost of adoption new program= training employes+training suppliers+ identifying preferred suppliers+strength tetsing
=26000+36000+50000+66000=178000
Cost of not adopting=inspection of rawmaterial+rework and spoilage+ lost profits+warrnaty cost
=56000+69000+95000+23000=243000
Should adopt the new program. the program costs are less than not adopting by 65000

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