Costs ofquality analysis, nonfinancial quality measures. Ontario Industries manufactures two types of refrigerators, Olivia and $olta. Information on each refrigerator is as follows:

Olivia Solta Units manufactured and sold 10,000 units 5,000 units Selling price $2,400 $1,800 Variable costs per unit $1,440 $960 Hours spent on design 6,000 1,000 Testing and inspection hours per unit 1 0.5 Percentage of units reworked in plant 5% 10%

Rework costs per refrigerator $600 $480 Percentage of units repaired at customer site 4% 8%

Repair costs per refrigerator $720 $540 Estimated lost sales from poor quality — 300 units 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 8olta classified into prevention, appraisal, inter¬

nal 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 moni¬

tor as part of a total quality control effort.