(L.OBJ. 4) Analyzing costs of quality [20—30 min] Rachael, Inc., is using a costs-of-qu...

(L.OBJ. 4) Analyzing costs of quality [20—30 min]

Rachael, Inc., is using a costs-of-quality approach to evaluate design engineering efforts for a new wakeboard. Rachael’s senior managers expect the engineering work to reduce appraisal, internal failure, and external failure activities. The predicted reductions in activities over the 2-year life of the wakeboards follow. Also shown are the cost allocation rates for each activity.

Requirements

1. Compute the total cost of each job.

2. Is the job cost greater or less than that computed in Problem 16-37 for each job? Why?

3. If Haupt wants to earn profits equal to 25% of sales revenue, how much (what fee) should it charge each of these two clients?