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Learning Objective 52 Classifying quality costs and using these costs to make decisions Loiselle manufactures...

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Accounting

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Learning Objective 52 Classifying quality costs and using these costs to make decisions Loiselle manufactures high-quality speakers. Suppose Loiselle is considering spending he following amounts on a new quality program: 2. Total cost to underta $2,305,000 $ 625,000 Additional 20 minutes testing for each speaker Negotiating and training suppliers to obtain higher-quality materials and on-time delivery Redesigning the speakers to make them easier to manufacture 430,000 1,250,000 Loiselle expects this quality program to save costs as follows: Reduce warranty repair costs Avoid inspection of raw materials Avoid rework because of fewer defective units $ 275,000 580,000 825,000 It also expects this program to avoid lost profits from the following: Lost profits due to disappointed customers Lost production time due to rework $920,000 278,000 Requirements 1. Classify each of these costs into one of the four categories of quality costs (prevention, appraisal, internal failure, or external failure). 2. Should Loiselle implement the quality program? Give your reasons

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