Question

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 costsue004$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.

Based on the above, what is the amount of appraisal costs, if any, included here?

A) $18,000

B) $12,000

C) $15,000

D) Zero

Answer

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