= Homework: Ch 19 Hwk Question 1, T119-2 (simil... Part 1 of 2 HW Score: 83.19%, 83.19 of 100 points Points: 0 of 10 Save The QC manager and controller have forecast the following additional costs to modify the production process: (Click the icon to view the additional costs.) Special Design produces cell phone covers for all makes and models of cell phones. Special Design sells 1,060,000 units each year at a price of $14 per unit and a contribution margin of 35%. (Click the icon for additional information.) The current costs of quality are as follows: (Click the icon to view the costs.) Requirement If the improvements result in a 40% decrease in product replacement cost and a 60% decrease in customer returns, what is the impact on the overall COQ and the company's operating income? What should Special Design do? Explain. What is the impact on the overall COQ and the company's operating income? (Use parentheses or a minus sign for a net cost.) Amount Data Table Benefits of quality improvements 248, 100 Cost of making quality improvements Net benefit (cost) of making quality improvements More Info S 220,000 Prevention costs Appraisal costs Internal failure costs $ 150,000 - X Data Table $ Rework Scrap 380,000 25,000 $ A survey of Special Design customers over the past 12 months indicates that customers were very satisfied with the products but a number of customers were disappointed because the products they purchased did not fit their phones. The customers then had to hassle with returns and replacements. Special Design's managers want to modify their production processes to develop products that more closely match Special Design's specifications because the quality control in place to prevent poor-quality products from reaching customers is not working very well. External failure costs $ 100.000 $ 319,000 CAD design improvement Machine calibration improvement to meet specifications Product replacements Lost sales from customer returns $ 148, 100 $ 810.000 Print Done Print Done Print Done e Text Pages Calculator Get More Help Clear All Check