Cost of quality data are often expressed as indexes by dividing by some reference value, such as cost/sales dollar or cost/labor dollar. Compute a labor cost base index for Loire Valley Wine Co. from data in the worksheet Prob03-09 in the Excel workbook Ch03Data.xlsx on the Student Companion website, and prepare a memo to management.

 

Loire Valley Wine Co.
	$000's QUARTERLY QUALITY COSTS
	1	2	3	4
Total labor	18,000	17,500	20,500	17,200
% Total Labor/Base	100	97.22	113.89	95.56
External failure	1,400	900	950	530
Internal failure	1,700	1,925	1,250	900
Appraisal	900	1,100	1,350	700
Prevention	400	600	900	1,100
Total Quality Cost	4,400	4,525	4,450	3,230
	PERCENTAGES QTRLY. QUALITY/LABOR COSTS
	1 Qtr.	2 Qtr.	3 Qtr.	4 Qtr.
External failure	7.78	5.14	4.63	3.08
Internal failure	9.44	11.00	6.10	5.23
Appraisal	5.00	6.29	6.59	4.07
Prevention	2.22	3.43	4.39	6.40
Total Quality/Labor Cost	24.44	25.86	21.71	18.78

Transcribed Image Text:

Percent of Labor 30.00 25.00 20.00 15.00 10.00 5.00 0.00 1 Qtr. Loire Valley Wine Co. - Cost of Quality 2 Qtr. Quarters 3 Qtr. 4 Qtr. External failure Internal failure Appraisal Prevention Total Quality/Labor Cost