Question

Darrel&Co. makes electronic components. Chris Darrel, the president, recently instructed Vice President Jim Bruegger to develop a total quality control program. "If we don't at least match the quality improvements our competitors are making," he told Bruegger, "we'll soon be out of business." Bruegger began by listing various "costs of quality" that Darrel incurs. The first six items that came to mind were (Click the lcon to view the information.) Classify each item as a prevention cost, an appraisal cost, an internal failure cost, or an extenal failure cost. The, determine the total cost of quality by category. Begin by classifying each item as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost by entering each amount in the appropriate column, then, determine the total cost of quality by category. (If a box is not used in the table leave the box empty do not enter a zero.) Provention Cost Appraisal Cost Internal Failure Cost External Failure Cost C. Total More Info a. Costs incurred by Darrel customer representatives traveling to customer sites to repair defective products, $15,500 b. Lost profits from lost sales due to reputation for less-than-perfect products, $80,000 c. Costs of inspecting components in one of Darrels production processes, $32,500 d. Salaries of engineers who are redesigning components to withstand electrical overloads, $100,000. e. Costs of reworking defective components after discovery by company inspectors, $55,000. f. Costs of electronic components returned by customers, $70,000.

Answer 1

Prevention Cost   Appraisal Cost   Internal Failure External Failure

                                                                    Cost                   cost

a                                                                                      15,000

b                                                                                      80,000

c                            32,500  

d   100,000    

e                                                         55,000  

f                                                                                      70,000

Total 100,000             32,500            55,000        165,000