The CEO of Yuppie Prepared Meals is concerned about the amount of resources currently spent on customer warranty claims. Each box of snacks is printed with the guarantee: "Satisfaction
guaranteed or your money back." Since the claims are so high, she would like to evaluate
what costs are being incurred to ensure the quality of the product. The following information
was collected from various departments within the company:
| Cost of defective products found at the inspection point | 70,000 |
| Training factory personnel. | 20,000 |
| Recall of Batch #59374 | 130,000 |
| Inspecting products when halfway through the production process | 45,000 |
| Cost of disposing of rejected products | 9,000 |
| Preventive maintenance on factory equipment | 5,000 |
| Production loss due to machine breakdowns | 12,000 |
| Inspection of raw materials | 4,000 |
As the new cost accountant the CEO has requested that you complete the following Cost of Quality Report:
| |
Costs
Incurred |
Total Costs
of Quality | Percentage of
Total Costs
of Quality |
| Prevention Costs: | | | |
| | | | |
| | | | |
| Total prevention costs | | | |
| Appraisal Costs: | | | |
| | | | |
| | | | |
| Total appraisal costs | | | |
| Internal Failure Costs: | | | |
| | | | |
| | | | |
| | | | |
| Total Internal Failure costs | | | |
| External Failure Costs: | | | |
| | | | |
| | | | |
| Total external failure costs | | | |
| Total costs of quality | | | |
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