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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 The QC manager and controller have forecast the following additional costs to modify the production process: unit and a contribution margin of 35%. (Click the icon to view the additional costs.) (Click the icon for additional information.) Requirement The current costs of quality are as follows: 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 B (Click the icon to view the costs.) COQ and the company's operating income? What should Special Design do? Explain. C!!! What is the impact on the overall COQ and the company's operating income? (Use parentheses or a minus sign for a net cost.) Data Table Amount Benefits of quality improvements - X 248, 100 Cost of making quality improvements More Info S 220,000 Prevention costs Appraisal costs S 150,000 Net benefit (cost) of making quality improvements Internal failure costs Rework S 380.000 S 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. Data Table Scrap External failure costs S Product replacements Lost sales from customer returns 319.000 810,000 $ 100,000 S CAD design improvement Machine calibration improvement to meet specifications $ 148,100 Print Done Print Done Print Done e Text Pages Calculator Get More Help. Clear All Check