Christi Inc Is Using A Costsofquality Approach To Evaluate Design

Christi, Inc., is using a costs-of-quality approach to evaluate design engineering efforts for a new skateboard. Christi’s senior managers expect the engineering work to reduce appraisal, internal failure, and external failure activities. The predicted reductions in activities over the 2-year life of the skateboards follow. Also shown are the cost allocation rates for each activity.

Christi, Inc., is using a costs-of-quality approach to evaluate

Requirements
1. Calculate the predicted quality cost savings from the design engineering work.
2. Christi spent $103,000 on design engineering for the new skateboard. What is the net benefit of this “preventive” quality activity?
3. What major difficulty would Christi’s managers have in implementing this costs-of-quality approach? What alternative approach could they use to measure qualityimprovement?

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