Abernathy, Inc., produces two different generators and is concerned about their quality. The company has identified the following quality activities and costs associated with the two products:

Required:
1. Calculate the quality cost per unit for each product, and break this unit cost into quality cost categories. Which of the two seems to have the lowest quality?
2. How might a manager use the unit quality cost information?

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Generator A Generator B Units produced Warranty work (units) Scrapped units (number) Inspection (hours) Quality training (hours) Activities: 170,000 1,700 3,400 3,400 85 340,000 850 850 1,700 85 Performing warranty work Scrapping units Inspecting Quality training $816,000 612,000 306,000 85,000