Quality initiative decision (Learning Objective 5)

Wharfedale manufactures high-quality speakers. Suppose Wharfedale is considering spending the following amounts on a new quality program:

Wharfedale expects this quality program to save costs as follows:

It also expects this program to avoid lost profits from:

1. Classify each of these costs into one of the four categories of quality costs (prevention, appraisal, internal failure, external failure).
2. Should Wharfedale implement the quality program? Give your reasons.

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Additional 20 minutes of testing for each speaker....... Negotiating with and training suppliers to obtain higher-quality materials and on-time delivery......... Redesigning the speakers to make them easier to manufacture..... $ 600,000 300,000 1,400,000