Problem

Flip Flop’s To Go has gathered the following data on its quality costs for the past two ye...

Flip Flop’s To Go has gathered the following data on its quality costs for the past two years:

 

Year 1

Year 2

Prevention costs:

Quality training

$ 8,000

$10,500

Quality technology

7,500

9,000

Quality production design 

4,000

9,000

Failure costs:

Warranty handling 

$15,000

$10,000

Customer reimbursements

11,000

7,200

Customer returns handling 

7,000

4,000

a. Compute the percentage change in the total quality costs from year 1 to year 2.


b. Explain what you think caused the change.

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