Kimmering Company had actual quality costs for the year ended June 30, 2011, as given below.

At the zero-defect state, Kimmering expects to spend $150,000 on quality engineering, $30,000 on vendor certification, and $20,000 on packaging inspection. Assume sales to be $10,000,000.
Required:LO1

Transcribed Image Text:

Prevention costs: Quality engineering Vendor certification Total prevention costs Appraisal costs: Packaging inspection Test labor $ 120,000 240,000 $ 360,000 $ 126,000 144,000 Total appraisal costs $ 270,000 Internal failure costs: Retesting $ 75,000 Rework 150,000 Total internal failure costs $ 225,000 External failure costs: Recalls $ 97,500 Product liability 247,500 Total external failure costs Total quality costs $ 345,000 $1,200,000