Lori, Inc., is using a costs-of-quality approach to evaluate design engineering efforts for a new skateboard. Loris senior managers expect the engineering work to reduce appraisal, internal failure, and external failure activities. The predicted reductions in activities over the 2-year life of the skateboards follow. Also shown are the cost allocation rates for each activity. Activity Predicted Reduction in Activity Units Act Cost Allocation Per Unit of Act Inspection of incoming 380 46 Materials Inspection of Finished 380 25 Goods Number of Defective 1,200 50 Units discovered in house Number of Defective Units Discovered by Customers 275 74 Lost sales to Dissatisfied Customers 175 101 Requirements R1. Calculate the predicted quality cost savings from the design engineering work. R2. Lori spent $102,000 on design engineering for the new skateboard. What is the net benefit of this preventive quality activity? R3. What major difficulty would Loris managers have in implementing this costs-of quality approach? What alternative approach could they use to measure quality improvement