Quality improvement. Frankford Manufacturing makes bicycle frames in two processes, tubing and welding. The tubing process has a capacity of 50,000 units per year; welding has a capacity of 75.000 units per year. Costs of quality information follow:

Demand is very strong. Frankford can sell whatever output it can produce at $50 per frame.
Frankford can start only 50.000 units into production in the tubing department because of c apacity constraints on the tubing machines. Any defective units produced in the tubing department are scrapped. Of the 50.000 units started at the tubing operation, 5,000 units ( 10 percent) are scrapped. Scrap costs, based on total (fixed and variable)
manufacturing costs incurred through the tubing operation, equal $35 per unit as follows:

The good units from the tubing department are sent to the welding department. Variable manufacturing costs at the welding department are $3.50 per unit. There is no scrap in the welding department. Therefore Frankford's total sales quantity equals the tubing department's output. Frankford incurs no other variable costs.
Frankford's designers have discovered that adding a different type of material to the existing direct materials would reduce scrap to zero, but it would increase the variable costs per unit in the tubing department by $2.00. Recall that only 50,000 units can be started each year.

a. What is the additional direct materials cost of implementing the new method?

b. What is the additigaaJLbenefit to Frankford from using the new material and improving quality?

c. Should Frankford use the new materials?

d. What other nonfinancial and qualitative factors should Frankford consider in making the decision?

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Design of product and process costs Inspection and testing costs Scrap costs (all in the tubing dept.) $110,000 42,500 175,000