Question

0 Data Table 4,000 units 1,250 650 Number of units manufactured and sold Selling price per unit Variable manufacturing and selling costs per unit Hours spent by engineers improving design ... ................. Testing and inspection hours per unit Percentage of units reworked in the plant after inspection Average variable rework costs per refrigerator Percentage of units repaired under warranty at customers' homes Average variable repair costs at customers' homes per refrigerator Estimated lost sales due to quality reputation Design engineer's labor rate (includes benefits and payroll taxes) Inspection costs per hour. 800 0.5 hours 9% 500 5% 540 400 units $80 per hour $30 per hour Print Done

I'm struggling with filling in the boxes below. Help would be much appreciated.

Answer 1

	Cost incurred	Total Cost of Quantity	Percentage of Total costs of Quality
Prevention costs
Design review cost	64,000
Total Prevention cost		64,000	9.5%
Appraisal cost
Testing and inspection cost	60,000
Total appraisal cost		60,000	8.9%
Internal Failure costs
Rework cost	1,80,000
Scrap	2,60,000
Total Internal Failure costs		4,40,000	65.5%
External Failure costs
Warranty repairs	1,08,000
Total External failure costs		1,08,000	16.1%
Total cost of quality		6,72,000
Working note
1) Calculation of Prevention cost
Engineers hours spent improving design	800 hours
Rate per hour	$ 80
Total cost	$ 64000
2) Calculation of Appraisal cost
Testing cost = 2000 hours *$ 30 per hour
$ 60000
3) Internal Failure costs
Rework cost = (4000*9%)* $ 500 per refrigerator = $ 180000
Scrap = 400 *650 = $ 260000
4) Calculation of External Failure costs
Warranty repairs = (4000 *5% )*$ 540 = $ 108000