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Exercise 11-20 QualityCosts

Tiffany Lamp Company produces stained-glass lamps that are appropriate for home and office use. The company expects sales to total approximately $50 million for the current year. Tiffany's management team has become increasingly concerned about a perception among some customers that quality is not particularly important to the company. Consequently, management recently implemented a quality improvement program and, after several months, accumulated the following data:

Required:

A. What are the totalprevention costs? $

B. What are the totalappraisal costs? $

C. What are the totalinternal failure costs? $

D. What are the totalexternal failure costs? $

E. On the basis of your calculations, is there a reason for the perception that quality is not important to Tiffany Lamp Company? SelectYesNoItem 5

What is that reason?

The input in the box below will not be graded, but may be reviewed and considered by your instructor.