P25-6A Pedals. Inc.. is using a costs-of-quality approach to evaluate design engineering efforts for a new bicycle helmet. Pedal's senior managers expect the engineering work to reduce appraisal, internal failure, and external failure activities. The predicted reductions in activities over the 2-year life of the bicycle helmets follow. Also shown are the cost allocation rates for each activity. Activity Inspection of incoming materials. Inspection of work in process... Predicted Reduction in Activity Cost Allocation Rate: Activity Units Per Unit 300 $ 40 300 20 Number of defective units discovered in-house. 1.000 50 Number of defective units discovered by customers.... 400 70 Lost sales to dissatisfied customers. 200 110 Required 1. Calculate the predicted quality cost savings from the design engineering work. 2. Pedals spent $110,000 on design engineering for the new bicycle helmet. What is the net benefit of this "preventive" quality activity? 3. What major difficulty would Pedal's managers have in implementing this costs-of-quality approach? What alternative approach could they use to measure quality improvement?