=+16-42 K Ethics and quality OBJECTIVES 1, 3 Wainwright Corporation manufactures car parts for two leading Japanese car makers. Nancy Evans is the management accountant for one of Wainwright’s largest manufacturing plants. The plant’s General Manager, Chris Sheldon, has just returned from a meeting at corporate headquarters where quality expectations were outlined for 2015. Chris calls Nancy into his office to relay the corporate quality objective that total quality costs will not exceed 10% of total revenues by plant under any circumstances. Chris asks Nancy to provide him with a list of options for meeting corporate headquarters’ quality objective. The plant’s initial budgeted revenues and quality costs for 2015 are as follows:

Revenue 3 400 000 Quality costs:

Testing of purchased materials 32 000 Quality control training for production staff 5 000 Warranty repairs 82 000 Quality design engineering 48 000 Customer support 37 000 Materials scrap 12 000 Product inspection 102 000 Engineering redesign of failed parts 21 000 Rework of failed parts 18 000