=+16-18 K Costs of quality, ethical considerations (continuation of 16-17) OBJECTIVES 2, 4 Cosy Capsule has discovered a more serious problem with the plastic core of its car seats. An accident can cause the plastic in some of the seats to crack and break, resulting in serious injuries to the occupant. It is estimated that this problem will affect about 175 car seats in the next year. This problem could be corrected by using a higher-quality plastic that would increase the cost of every car seat produced by $15. If this problem is not corrected, Cosy Capsule estimates that in only two accidents out of the 175 will customers realise that the problem is due to a defect in the seats. Cosy Capsule’s legal team has estimated that each of these two accidents would result in a lawsuit that could be settled for about $775000. All lawsuits settled would include a confidentiality clause, so Cosy Capsule’s reputation would not be affected.

Required 1 Assuming that Cosy Capsule expects to sell 250000 car seats next year, what would be the cost of increasing the quality of all 250000 car seats?