Bradshaw Corp. manufactures radiation-shielding glass panels. Suppose the company is considering spending the following amounts on a new TQM program:

Strength-testing one item from each batch of panels ............................... $62,000

Training employees in TQM ...................................................................... $21,000

Training suppliers in TQM ......................................................................... $31,000

Identifying preferred suppliers that commit to on-time delivery

of perfect quality materials ........................................................................ $55,000

The company expects the new program would save costs through the following:

Avoid lost profits from lost sales due to disappointed customers .............. $89,000

Avoid rework and spoilage ........................................................................ $65,000

Avoid inspection of raw materials ............................................................. $50,000

Avoid warranty costs ................................................................................. $25,000

Requirements

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

2. Should the company implement the new quality program? Give your reason.