P25-6B KoffeeKup is using a costs-of-quality approach to evaluate design engineering efforts for a new electric coffeemaker. The company's senior managers expect the engineering work to reduce appraisal, internal failure, and external failure activities. The predicted reduc- tions in activities over the 2-year life of the coffeemaker follow. Also shown are the cost allo- cation rates for each activity. Activity Inspection of incoming materials Inspection of finished goods. Number of defective units discovered Predicted Reduction in Activity Units 200 200 Activity Cost Allocation Rate Per Unit $20 30 in-house....... 3,000 15 Number of defective units discovered by customers.. 800 35 Lost sales to dissatisfied customers. 300 55 Required 1. Calculate the predicted quality cost savings from the design engineering work. 2. KoffeeKup spent $55,000 on design engineering for the new coffeemaker. What is the net benefit of this "preventive" quality activity? 3. What major difficulty would KoffeeKup's managers have had in implementing this costs- of-quality approach? What alternative approach could they use to measure quality improvement?