Manhattan Mills Corp

question 48

Essay

Manhattan Mills Corp. has identified the following selected quality costs:
▪ Warranty costs: $80,000
▪ Employee training: $30,000
▪ Repair of units prior to shipment to customers: $15,000
▪ Quality engineering: $70,000
▪ Product inspection during manufacturing: $40,000
▪ Travel to customer sites to perform repairs: $8,000
Required:
A. Compute the company's prevention, appraisal, internal failure, and external failure costs.
B. Does a "hidden" quality cost sometimes occur when bad units enter the marketplace? Briefly explain.
C. Which of the following could have greater negative ramifications for Manhattan Mills: $100,000 of internal failure costs or $100,000 of external failure costs? Why?

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Definitions:

Management Education

Academic and professional training programs that aim to equip individuals with knowledge, skills, and competencies required for effective organizational management.

Zappo's Core Values

A set of guiding principles that reflect the company culture and ethos of Zappos, emphasizing customer service, employee welfare, and company culture.

Manager

An individual who is in charge of a certain group of tasks, or a certain subset of a company, with responsibilities that include leading employees and making decisions to ensure organizational goals are met.

Management Consultant

A professional who provides advice to businesses on strategy, structure, management, and operations.