Ontario Industries manufactures two types of refrigerators, Olivia and Solta. Information on each refrigerator is as follows:

The labour rates per hour for various activities are as follows:
Design ............ $90 per hour
Testing and inspection...... $48 per hour
REQUIRED
1. Calculate the costs of quality for Olivia and Solta classified into prevention, appraisal, internal failure, and external failure categories.
2. For each type of refrigerator, calculate the ratio of each COQ item as a percentage of sales.
Compare and comment on the costs of quality for Olivia and Solta.
3. Give two examples of nonfinancial quality measures that Ontario Industries could monitor as part of a total quality-control effort.

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Olivia Solta Units manufactured and sold Selling price Variable costs per unit Hours spent on design Testing and inspection hours per unit Percentage of units reworked in plant Rework costs per refrigerator Percentage of units repaired at customer site Repair costs per refrigerator Estimated lost sales from poor quality 10,000 units S2,400 $1,440 5,000 units S1,800 $ 960 1,000 6,000 0.5 10% 5% S 600 480 4% 3% S 720 540 300 units