What are the costs and ethics involved in a recall of surge protectors? Original blog posting (October 22, 2013)

Schneider Electric recalled 15 million of its SurgeArrest surge protectors Due to 700 reports of overheating and melting, 13 reports of injuries, and 55 reports of property damage including a house fire ($916,000 in damages) and a medical facility fire ($750,000 in damages.)

Question 1 Prevention costs Appraisal costs Internal failure costs List some possible examples of the following types of quality costs at Schneider Electric: Prevention costs Appraisal costs Internal failure costs   

Question 2 What are some of the external failure quality costs involved with Schneider Electric’s APC 7 and APC 8 surge protectors? 

Question 3 Schneider Electric has been criticized for delaying the recall, even though it received over 700 reports of problems.  What rationale(s) do you think the company could make for delaying the recall?  In your opinion, is the recall delay ethical?  Why or why not?

Question Recap List some possible examples of the following types of quality costs at Schneider Electric: Prevention costs Appraisal costs Internal failure costs  What are some of the external failure quality costs involved with Schneider Electric’s APC 7 and APC 8 surge protectors?  Schneider Electric has been criticized for delaying the recall, even though it received over 700 reports of problems.  What rationale(s) do you think the company could make for delaying the recall?  In your opinion, is the recall delay ethical?  Why or why not?

For additional news stories to use in the accounting classroom, see the Accounting in the Headlines blog at http://accountingintheheadlines.com/ Related video resources can be found at http://www.youtube.com/user/accountingheadlines Questions or comments? Contact Dr. Wendy Tietz at wtietz@kent.edu