Question

Data Table PEL U LIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A ..... $ A Number of units manufactured and sold ....... .......... 2,500 units Selling price per unit .... 2,000 Variable manufacturing and selling costs per unit 1,100 Hours spent by engineers improving design 1,200 Testing and inspection hours per unit ......... 1.5 hours Percentage of units reworked in the plant after inspection .... 7% Average variable rework costs per refrigerator .... 300 Percentage of units repaired under warranty at customers' homes ........ 6% Average variable repair costs at customers' homes per refrigerator ..........$ 480 Estimated.lost sales.due to quality. reputation .... 550 units Design engineer's labor rate (includes benefits and payroll taxes)........... $110 per hour Inspection costs per hour. .......................................... $30 per hour o r . . . . . . . . . . . . . . . . A . . . . . . . .......... Print Done

Answer 1

Total Costs of Quality Percentage of Total Costs of Quality (Rounded) Working Gooding Cost of Costs 3 Quality Report Incurred 4. Prevention Cost 5 Design Engineering 132,000 6 Total Prevention Cost 1200*110 132,000 15% 8 Appraisal Costs 1 9 Testing and Inspectior 10 Total Appraisal Cost 112,500 1.5*2500*30 112,500 13% 11 52,500 2500*7%*300 12 Internal Failure Costs 13 Rework (Internal) Total Internal Failure 14 Cost 52,500 6% 15 72,000 2500*6%*480 18 495,000 550*900 16 External Failure Costs 17 Rework (External) Lost Profits due to poor reputation Total External 19 Failure Cost 20 21 Total Cost of Quality 567,000 66% 864,000 100% 22 23