should clarke implement the new quality program give your reason 556832

Classifying quality costs and using these costs to make decisions

Clarke, Inc., manufactures door panels. Suppose Clarke is considering spending the following amounts on a new total quality management (TQM) program:

Strength testing one item from each batch of panels

$ 62,000

Training employees in TQM


Training suppliers in TQM


Identifying suppliers who commit to on time delivery of

perfect quality materials


Clarke expects the new program would save costs through the following:

Avoid lost profits from lost sales due to disappointed customers

$ 94,000

Avoid rework and spoilage


Avoid inspection of raw materials


Avoid warranty costs



1. Classify each cost as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost.

2. Should Clarke implement the new quality program? Give your reason.

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