Sherri, Inc. is using a costs-of-quality approach to evaluate design engineering efforts for a new skateboard. Sherri'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 (Click the icon to view the information.) Read the requirements Requirement 1, Calculate the predicted quality cost savings from the design engineering work Inspection of incoming raw materials Inspection of finished goods Number of defective units discovered in-house Number of defective units discovered by customers Lost sales due to dissatisfied customers Total predicted quality cost savings Predicted Reduction in Activity Units Predetermined Overhead Allocation Rate per Unit Predicted Quality Cost Savings 390 45 390 23 1,100 55 425 74 150 104 Data table Predicted Predetermined Activity Inspection of incoming raw materials Inspection of finished goods Number of defective units discovered in-house Number of defective units discovered by customers Lost sales due to dissatisfied customers Reduction in Overhead Allocation Activity Units Rate per Unit 390 $ 45 390 23 55 74 150 104 1,100 425 Print Done