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:

Business Professionals

Individuals who work in areas related to commerce, such as finance, marketing, or management.

Claim Letter

A formal letter written to demand a correction or a payment due to unsatisfactory products or services received.

Persuasive Technique

A method or approach used to convince or influence someone to agree with a viewpoint, make a decision, or take action by appealing to logic, emotions, or ethics.

On-site

Located or taking place at a particular site or location, often in relation to work or an event.