Business, 18.03.2021 01:10 tayybabyy8
In response to intensive foreign competition, the management of Florex Company has attempted over the past year to improve the quality of its products. A statistical process control system has been installed and other steps have been taken to decrease the amount of warranty and other field costs, which have been trending upward over the past several years. Costs relating to quality and quality control over the last two years are given below:
Costs (in thousands)
Last Year This Year
Inspection $750 $900
Quality engineering $420 $570
Depreciation of test equipment $210 $240
Rework labor $1,050 $1,500
Statistical process control $0 $180
Cost of field servicing $1,200 $900
Supplies used in testing $30 $60
Systems development $480 $750
Warranty repairs $3,600 $1,050
Net cost of scrap $630 $1,125
Product testing $810 $1,200
Product recalls $2,100 $750
Disposal of defective products $720 $975
Sales have been flat over the past few years, at $75,000,000 per year. A great deal of money has been spent in the effort to upgrade quality, and management is anxious to see whether or not the effort has been effective.
Required:
Prepare a quality cost report that contains data for both this year and last year.
Answers: 3
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In response to intensive foreign competition, the management of Florex Company has attempted over th...
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