12-19 (Static) Quality Cost Report [LO12-2] In response to intensive foreign competition, the management of Florex Company has attempted over the past year to improve the quality of its products. A statistical process control system has been installed and other steps have been taken to decrease the amount of warranty and other field costs, which have been trending upward over the past several years. Costs relating to quality and quality control over the last two years are given below. Inspection Quality engineering Depreciation of test equipment Rework labor Statistical process control Cost of field servicing Supplies used in testing Systems development Warranty repairs Last Year This Year $ 750 $ 900 $ 420 $ 570 $ 210 $ 248 $ 1,050 $ 0 Net cost of scrap Product testing Product recalls Disposal of defective products $ 1,200 $ 30 $ 480 $ 3,600 $ 630 $ 810 $2,100 $ 720 $ 1,500 $ 180 $ 900 $60 $ 750 $ 1,050 $ 1,125 $ 1,200 $ 750 $ 975 Sales have been flat over the past few years, at $75,000,000 per year. A great deal of money has been spent in the effort to upgrade quality, and management is anxious to see whether or not the effort has been effective. Required: 1. Prepare a quality cost report that contains data for both this year and last year. (Enter amount values in thousands. Round your percentage answers to 2 decimal places (1.e 0.1234 should be entered as 12.34).) Answer is not complete. Florex Company Quality Cost Report Last Year Amount (In thousands) This Year Percent of Sales Amount (In thousands) Percent of Sales Prevention costs: Systems development 480- 0.64 750- 0.01 Statistical process control 0 0.00 180 0.24 Quality engineering 420- 0.56 570 0.76 Total prevention costs 900 1.20 1,500 1.01 Appraisal costs Inspection 750 0.01 900- 0.12x Supplies used in testing 30- 60 Depreciation of test equipment 210 0.28 240 0.32 Total appraisal costs Internal failure costs Net cost of scrap Rework labor Disposal of defective products Total internal failure costs External failure costs: 100 990 0.29 1,200 0.44 630 1,125 0.15x 1,050 0.14 720- 1,500 975 0.02 x 2,400 0.14 3,600 0.13 x 0.30 Product recalls 2,100 0.28 x Warranty repairs 3,600 0.48 750 1,050 0.01 x 0.14 Cost of field servicing 1,200 0.16 x 900- 0.12 x Total external failure costs 6,900 0.92 2,700 0.27 Total quality cost