Biggo Construction Toys Corp. is using a costs-of-quality approach to evaluate design engineering efforts for a new toy robot. The company's senior managers expect the engineering work to reduce appraisal, internal failure, and external failure activities. The predicted reductions in activities over the two-year life of the toy robot follow. Also shown are the cost allocation rates for the activities. Click on the icon to view the information.) Read the requirements. Requirement 1. Calculate the predicted quality cost savings from the design engineering work. Predicted Reduction in Activity Activity Costs Inspection of incoming materials Inspection of finished goods. Number of defective units discovered in-house. Number of defective units discovered by customers Lost sales to dissatisfied customers Total predicted quality cost savings Requirement 2. The company spent $65,000 on design engineering for the new toy robot. What is the net benefit of this "preventive" quality activity? Less: Requirement 2. The company spent $65,000 on design engineering for the new toy robot. What is the net benefit of this "preventive" quality activity? Less: Net benefit of design engineering Requirement 3. What major difficulty would management have had in implementing this costs-of-quality approach? What alternative approach could it use to measure quality improvement? Data Table Activity Inspection of incoming materials Inspection of finished goods.... Number of defective units discovered in-house. Number of defective units discovered by customers. Lost sales to dissatisfied customers Predicted Activity Cost Reduction in Allocation Rate Activity Units per Unit 395 $ 23 395 $ 28 3,300 $ 19 925 S 42 320 $ 55 Print Done