Rachael, Inc. is using a costs$-$of$-$quality approach to evaluate design engineering efforts for a new skateboard. Rachael's senior managers expect the engineering work to reduce appraisal, intemal failure, and external failure activities. The predicted reductions in activities over the two$-$year life of the skateboards follow. Also shown are the predetermined overhead allocation rates for each activity.

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Read the requirements.

Requirement $1.$ Calculate the predicted quality cost savings from the design engineering work.

$\backslash$table$[[,\backslash$table$[[$Predicted$],[$Reduction in$],[$Activity$]],\backslash$table$[[$Predermined$],[$Overhead Allocation$],[$Rate per Unit$]],\backslash$table$[[$Predicted$],[$Quality Cost$],[$Savings$]]],[$Inspection of incoming raw materials,$420,37,],[$Inspection of finished goods,$420,21,],[$Number of defective units discovered in$-$house,$1,100,51,],[$Number of defective units discovered by customers,$375,68,],[$Lost sales due to dissatisfied customers,$75,103,],[$Total predicted quality cost savings,,,$]]$

Requirement $2.$ Rachael spent $$105,000$ on design engineering for the new skateboard. What is the net benefit of this "preventive" quality activity?