The Hartono Corporation manufactures and sells industrial grinders. The following table presents financial information pertaining to quality in 19-6 and 19-7 (in thousands): 19-7 19-6 Sales $12,500 $10,000 Line inspection 85 110 Scrap 200 250 Design engineering 240 100 Cost of returned goods 145 60 Product-testing equipment 50 50 Customer support 30 40 Rework costs 135 160 Preventive equipment maintenance 90 35 Product liability claims 100 200 Incoming materials inspection 40 20 Breakdown maintenance 40 90 Product-testing labour 75 220 Training 120 45 Warranty repair 200 300 Supplier evaluation 50 20 REQUIRED: 1. Classify the cost items in the table into prevention, appraisal, internal failure, or external failure categories. 2. Calculate the ratio of each COQ category to sales in 19-6 and 19-7. Comment on the trends in the costs of quality between 19-6 and 19-7.
The Hartono Corporation manufactures and sells industrial grinders. The following
table presents financial information pertaining to quality in 19-6 and 19-7 (in
thousands):
19-7 19-6
Sales $12,500 $10,000
Line inspection 85 110
Scrap 200 250
Design engineering 240 100
Cost of returned goods 145 60
Product-testing equipment 50 50
Customer support 30 40
Rework costs 135 160
Preventive equipment maintenance 90 35
Product liability claims 100 200
Incoming materials inspection 40 20
Breakdown maintenance 40 90
Product-testing labour 75 220
Training 120 45
Warranty repair 200 300
Supplier evaluation 50 20
REQUIRED:
1. Classify the cost items in the table into prevention, appraisal, internal failure, or
external failure categories.
2. Calculate the ratio of each COQ category to sales in 19-6 and 19-7. Comment on
the trends in the costs of quality between 19-6 and 19-7.
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