Mercury, Incorporated, produces cell phones at its plant in Texas. A year ago, a consumer survey ranked the company's cell phones low in product quality. Shocked by this result, Jorge Gomez, Mercury's president, set up a task force to implement a formal quality improvement program. Included on this task force were representatives from the Engineering, Marketing, Customer Service, Production, and Accounting departments. After working together for a year, the task force prepared the quality cost report shown below: Prevention costs: Machine maintenance Training suppliers Quality circles Total prevention cost Appraisal costs: Incoming inspection Final testing Total appraisal cost Internal failure costs: Rework Scrap Total internal failure cost External failure costs: Warranty repairs Customer returns Mercury, Incorporated Quality Cost Report (in thousands) Total external failure cost Total quality cost Total production cost Prevention costs: Machine maintenance Training suppliers Quality circles Total prevention costs Appraisal costs Incoming inspection Final testing Total appraisal costs Internal failure costs: Rework Scrap Total internal failure costs External failure costs: Warranty repairs Customer returns Total external failure costs Total quality cost Amount $ Required: 1. Expand the company's quality cost report by showing the costs in both years as percentages of both total production cost and total quality cost Note: Round your percentage answers to 1 decimal place (i.e 0.1234 should be entered as 12.3). $ 83 0 0 83 33 93 126 63 53 116 Last Year This Year 103 333 $83 0 0 83 436 761 33 93 126 63 53 116 103 333 436 $ 761 $ 4,850 Last Year Percentage of Total Production Cost 0.0 0.0 $ 133 23 33 189 Mercury, Incorporated Quality Cost Report (in thousands) 0.0 53 103 156 0.0 0.0 143 83 226 43 93 136 $ 707 $5,450 Percentage of Total Quality Cost 0.0 0.0 0.0 Amount S 0.0 00 $ 133 23 33 189 53 103 156 143 83 226 43 93 136 707 Tural This Year Percentage of Total Production Cost 0.0 0.0 0.0 0.0 0.0 Percentage of Total Quality Cost 0.0 0.0 0.0 0.0 0.0 4

Mercury, Incorporated, produces cell phones at its plant in Texas. A year ago, a consumer survey ranked the company's cell phones low in product quality. Shocked by this result, Jorge Gomez, Mercury's president, set up a task force to implement a formal quality improvement program. Included on this task force were representatives from the Engineering, Marketing, Customer Service, Production, and Accounting departments. After working together for a year, the task force prepared the quality cost report shown below: Prevention costs: Machine maintenance Training suppliers Quality circles Total prevention cost Appraisal costs: Incoming inspection Final testing Total appraisal cost Internal failure costs: Rework Scrap Total internal failure cost External failure costs: Warranty repairs Customer returns Mercury, Incorporated Quality Cost Report (in thousands) Total external failure cost Total quality cost Total production cost Prevention costs: Machine maintenance Training suppliers Quality circles Total prevention costs Appraisal costs Incoming inspection Final testing Total appraisal costs Internal failure costs: Rework Scrap Total internal failure costs External failure costs: Warranty repairs Customer returns Total external failure costs Total quality cost Amount $ Required: 1. Expand the company's quality cost report by showing the costs in both years as percentages of both total production cost and total quality cost Note: Round your percentage answers to 1 decimal place (i.e 0.1234 should be entered as 12.3). $ 83 0 0 83 33 93 126 63 53 116 Last Year This Year 103 333 $83 0 0 83 436 761 33 93 126 63 53 116 103 333 436 $ 761 $ 4,850 Last Year Percentage of Total Production Cost 0.0 0.0 $ 133 23 33 189 Mercury, Incorporated Quality Cost Report (in thousands) 0.0 53 103 156 0.0 0.0 143 83 226 43 93 136 $ 707 $5,450 Percentage of Total Quality Cost 0.0 0.0 0.0 Amount S 0.0 00 $ 133 23 33 189 53 103 156 143 83 226 43 93 136 707 Tural This Year Percentage of Total Production Cost 0.0 0.0 0.0 0.0 0.0 Percentage of Total Quality Cost 0.0 0.0 0.0 0.0 0.0 4

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter14: Quality And Environmental Cost Management

Section: Chapter Questions

Problem 35P: Recently, Ulrich Company received a report from an external consulting group on its quality costs....

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