Pollenti Company Has Just Merged with Another Industrial Firm Whose

question 151

Multiple Choice

Pollenti Company has just merged with another industrial firm whose business had been failing. Pollenti immediately conducted a thorough study of the new company's work processes, and produced a report including the data shown below:
• A new inspection process is recommended to minimize defective raw materials. It would cost $12,000 to implement.
• Shoddy business practices are resulting in excessive warranty costs $15,000 more than normal due mainly to material failure.
• Reengineering of the assembly line will increase productivity. It would cost $18,000 to implement.
• Inefficient workplace design is costing $5,000 in unnecessary rework costs.
• Estimated amount of lost profits due to dissatisfied customers who turn to the competition is $80,000.
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Based on the above, what is the amount of prevention costs, if any, included here?

• A) $18,000
• B) $12,000
• C) $15,000
• D) Zero

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Definitions:

Crisis Communication

A specialized area of public relations designed to protect and defend an individual, company, or organization facing a public challenge to its reputation.

Crisis Communication

The effort by a business or organization to communicate effectively during unexpected events that threaten to harm its reputation or stakeholders.

Issues Management

The systematic identification, evaluation, and handling of any issue that could impact an organization’s ability to achieve its objectives, often involving preventive public relations strategies.

Social Media

Digital platforms that enable users to create and share content or participate in social networking.