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, internal 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. B (Click the icon to view the information.) Read the requirements Data Table - X Predicted Quality Cost Savings Requirement 1. Calculate the predicted quality cost savings from the design engineering work. Predicted Predetermined Reduction in Overhead Allocation Activity Units Rate per Unit Inspection of incoming raw materials 420 $ 44 Inspection of finished goods 420 25 Number of defective units discovered in-house 1,400 52 Number of defective units discovered by customers 400 72 Lost sales due to dissatisfied customers 175 104 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 Predicted Predetermined Reduction in Overhead Allocation Activity Units Rate per Unit 420 $ 44 420 25 1,400 52 400 72 175 104 Total predicted quality cost savings Requirement 2. Sherri spent $100,000 on design engineering for the new skateboard. What is the net benefit of this "preventive" quality activity? Print Done The net benefit of the "preventive" quality activity is Requirement 3. What major difficulty would Sherri's managers have in implementing this costs-of-quality approach? What alternative approach could they use to measure quality improvement? What major difficulty would Sherri's managers have in implementing this costs-of-quality approach? What alternative approach could they use to measure quality improvement