Maxwell Company produces two different carburetors 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?

Transcribed Image Text:

Carburetor A Carburetor B Units produced 170,000 340,000 Warranty work (units) 1,700 850 Scrapped units (number) 3,400 850 Inspection (hours) 3,400 1,700 Quality training (hours) 85 85 Activities: Performing warranty work $204,000 Scrapping units 153,000 Inspecting 76,500 Quality training 42,500