HW8 - 3300 3.47 2800 2.80 Total external failure cost 3300...

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Jack Meehan Accounting 152 P2-18 9/20/2007 Section 11 P2-18 Sales Year 1 95000000 Sales Year 2 100000000 Company Quality Cost Report For Years 1 and 2 Year 1 Year 2 Amount Percent Amount Percent Prevention Costs: Systems development 120 0.13% 680 0.68% Cost of testing equipment 270 0.28% 390 0.39% Quality engineering 1080 1.14% 1650 1.65% Total prevention cost 1470 1.55% 2720 2.72% Appraisal Costs: Inspection 1700 1.79% 2770 2.77% Statistical process control 0 0.00% 270 0.27% Total appraisal cost 1700 1.79% 3040 3.04% Internal failure costs: Product recalls 3500 3.68% 600 0.60% Net Cost of scrap 800 0.84% 1300 1.30% Supplies used in testing 30 0.03% 40 0.04% Rework labor 1400 1.47% 1600 1.60% Customer returns of defetive goods 3200 3.37% 200 0.20% Downtime due to quality problems 600 0.63% 1100 1.10% Total internal failure cost 9530 10.03% 4840 4.84% External failure costs: Warranty repairs
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Unformatted text preview: 3300 3.47% 2800 2.80% Total external failure cost 3300 3.47% 2800 2.80% 16000 16.84% 13400 13.40% c) From year 1 to year 2, total prevention costs have decreased and sales have increased thus, the percentage of costs related to quality have decreased to 13.40%. While the company has taken steps to increase prevention and appraisal costs, these have translated greatly to the rough $4000 decrease in internal failure cost., whive decreased roughly 6% as a percentage of sales. Total prevention cost Total appraisal cost Total internal failure cost Total external failure cost 2000 4000 6000 8000 10000 12000 Distribution of Quality Costs 1470 1700 9530 3300 2720 3040 4840 2800 Costs Amount ($)...
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