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Cannon manufactures high-quality speakers. Suppose Cannon is considering spending the following amounts on a new quality program: Cannon expects this quality program to save costs
Cannon manufactures high-quality speakers. Suppose Cannon is considering spending the following amounts on a new quality program:
Cannon expects this quality program to save costs as follows:
It also expects this program to avoid lost profits from the following:
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$ 830,000 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... $ 300,600 $ 1,400,000 $ 207,000 Reduced warranty repair costs.. Avoid inspection of raw materials... Rework avoided because of fewer defective units $ 401,000 $ 658,000 $ 858,000 Lost sales due to disappointed customers ...... Lost production time due to rework.. $ 303,000 1. First classify each of these costs into one of the four categories of quality costs, then prepare a cost-benefit analysis of the proposed quality program based on the four categories identified. (Use a minus sign or parentheses for savings amounts.) Cost (Benefit) Analysis Costs (Savings) Prevention costs: (1) (2) Appraisal costs: (3) Internal failure costs: (5) (6) External failure costs: (8) Net cost (benefit from implementing quality program 2. Should Cannon implement the quality program? the new quality program. The company (10) by Cannon (9) implementing the new programStep by Step Solution
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