Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen

Exercise 9

Using the Taguchi quality loss function, an average loss of $20 per unit is calculated. During the year, 25,000 units were produced. Which of the following statements represents the correct application of the Taguchi loss function? a. The hidden costs of internal failure are $500,000.
B) The hidden costs of external failure are $500,000.
C) The costs of detection activities are $20 per unit inspected.
D) The total external costs are $500,000.