Question

E19-18 (similar to) Question Help Osborn, Inc., produces cell phone equipment. Karen Mayfield, Osborn's president, implemented a quality-improvement program that has now been in operation for 2 years. The cost report shown here has recently been issued. (Click the icon to view the cost report.) Read the requirements.

Answer 1

Calculation of Ratio:-

1) Total Prevention Cost :-

% of Revenues = ($473 / $8320)*100 = 5.685%

% of Total Quality Costs = ($473 / $2075)*100 = 22.795%

2) Total Appraisal Cost :-

% of Revenues = ($458 / $8320)*100 = 5.50%

% of Total Quality Costs = ($458 / $2075)*100 = 22.07%

3) Total Internal Failure Cost :-

% of Revenues = ($358 / $8320)*100 = 4.30%

% of Total Quality Costs = ($358 / $2075)*100 = 17.25%

4) Total External Failure Cost :-

% of Revenues = ($786 / $8320)*100 = 9.447%

% of Total Quality Costs = ($786 / $2075)*100 = 37.879%

5) Total Quality Cost :-

% of Revenues = ($2075 / $8320)*100 = 24.94%