3. Laundry Manufacture and Supply make large washing machines for industrial use e.g. hospitals, work places providing protective clothing for safety or hygiene. The company is concerned that a number of units have to be reworked and others have to be mended at the customer's premises within the quarantee period. They wish to investigate the situation. The following data is available for the 6 months from 1 October 2021 to 31 March 2022 Units made and sold (sales price 2,000 per machine) 240,000 units Average contribution per washing machine 5.1,400 Units reworked in house (cost per rework 100 per unit) 7,200 units Preventive maintenance (E40 per hour) 6,240 hours Units repaired on customers' premises under guarantee (1,200 per repair) 10,000 units Reviewing Suppliers (E80 per hour) 1,200 hours Incorning material and component inspection (30 per hour) 30,000 hours Units scrapped before sale 1,600 units Manufacturing inspection hours (40 per hour) 432,000 hours 360 Cost of Customer support per repair at customer premises 6 months Production supervision 180,000 6 months staff training costs $240,000 Product testing costs 108,000 Lost Sales due to poor reputation 10,000 units Required a) Provide a cost of quality report for the six months, classified into appropriate categories. Show each quality cost as a percentage of turnover b) Comment on the information shown in the report. (10 marks) (4 marks) 3. Laundry Manufacture and Supply make large washing machines for industrial use e.g. hospitals, work places providing protective clothing for safety or hygiene. The company is concerned that a number of units have to be reworked and others have to be mended at the customer's premises within the quarantee period. They wish to investigate the situation. The following data is available for the 6 months from 1 October 2021 to 31 March 2022 Units made and sold (sales price 2,000 per machine) 240,000 units Average contribution per washing machine 5.1,400 Units reworked in house (cost per rework 100 per unit) 7,200 units Preventive maintenance (E40 per hour) 6,240 hours Units repaired on customers' premises under guarantee (1,200 per repair) 10,000 units Reviewing Suppliers (E80 per hour) 1,200 hours Incorning material and component inspection (30 per hour) 30,000 hours Units scrapped before sale 1,600 units Manufacturing inspection hours (40 per hour) 432,000 hours 360 Cost of Customer support per repair at customer premises 6 months Production supervision 180,000 6 months staff training costs $240,000 Product testing costs 108,000 Lost Sales due to poor reputation 10,000 units Required a) Provide a cost of quality report for the six months, classified into appropriate categories. Show each quality cost as a percentage of turnover b) Comment on the information shown in the report. (10 marks) (4 marks) c) Investigations have discovered that some of the washing machine drums are faulty, which is the main reason for units reworked in house and repaired at customer premises. The company has decided to: 1) spend 50 per unit on purchasing higher quality material for each unit i to provide additional training on producing the drums at a cost of 2,000,000 for the first six months and thereafter additional cost of 600,000 #i) increase inspection hours by 20% so that each inspection can be done more effectively. These changes will be introduced in April 2022 It is estimated that the changes will have the following effect, based on the figures to March 2022 6 months to 30% September 2022 30% 6 months to 31 March 2023 90% reduce the number of units to be reworked in house by 5,000 units 2,000 units Reduce the number of repairs on customer premises by Reduce lost reputation by 4,000 units 200 units For simplicity of comparisons assume that other than the changes considered above the details will be the same as from 1 October 2021 to 31 March 2022 costs, to indicate whether the suggested Show calculations for all activities and changes would be beneficial (8 marks) d) Comment briefly on the results (3 marks) (total 25 marks) 3. Laundry Manufacture and Supply make large washing machines for industrial use e.g. hospitals, work places providing protective clothing for safety or hygiene. The company is concerned that a number of units have to be reworked and others have to be mended at the customer's premises within the quarantee period. They wish to investigate the situation. The following data is available for the 6 months from 1 October 2021 to 31 March 2022 Units made and sold (sales price 2,000 per machine) 240,000 units Average contribution per washing machine 5.1,400 Units reworked in house (cost per rework 100 per unit) 7,200 units Preventive maintenance (E40 per hour) 6,240 hours Units repaired on customers' premises under guarantee (1,200 per repair) 10,000 units Reviewing Suppliers (E80 per hour) 1,200 hours Incorning material and component inspection (30 per hour) 30,000 hours Units scrapped before sale 1,600 units Manufacturing inspection hours (40 per hour) 432,000 hours 360 Cost of Customer support per repair at customer premises 6 months Production supervision 180,000 6 months staff training costs $240,000 Product testing costs 108,000 Lost Sales due to poor reputation 10,000 units Required a) Provide a cost of quality report for the six months, classified into appropriate categories. Show each quality cost as a percentage of turnover b) Comment on the information shown in the report. (10 marks) (4 marks) 3. Laundry Manufacture and Supply make large washing machines for industrial use e.g. hospitals, work places providing protective clothing for safety or hygiene. The company is concerned that a number of units have to be reworked and others have to be mended at the customer's premises within the quarantee period. They wish to investigate the situation. The following data is available for the 6 months from 1 October 2021 to 31 March 2022 Units made and sold (sales price 2,000 per machine) 240,000 units Average contribution per washing machine 5.1,400 Units reworked in house (cost per rework 100 per unit) 7,200 units Preventive maintenance (E40 per hour) 6,240 hours Units repaired on customers' premises under guarantee (1,200 per repair) 10,000 units Reviewing Suppliers (E80 per hour) 1,200 hours Incorning material and component inspection (30 per hour) 30,000 hours Units scrapped before sale 1,600 units Manufacturing inspection hours (40 per hour) 432,000 hours 360 Cost of Customer support per repair at customer premises 6 months Production supervision 180,000 6 months staff training costs $240,000 Product testing costs 108,000 Lost Sales due to poor reputation 10,000 units Required a) Provide a cost of quality report for the six months, classified into appropriate categories. Show each quality cost as a percentage of turnover b) Comment on the information shown in the report. (10 marks) (4 marks) c) Investigations have discovered that some of the washing machine drums are faulty, which is the main reason for units reworked in house and repaired at customer premises. The company has decided to: 1) spend 50 per unit on purchasing higher quality material for each unit i to provide additional training on producing the drums at a cost of 2,000,000 for the first six months and thereafter additional cost of 600,000 #i) increase inspection hours by 20% so that each inspection can be done more effectively. These changes will be introduced in April 2022 It is estimated that the changes will have the following effect, based on the figures to March 2022 6 months to 30% September 2022 30% 6 months to 31 March 2023 90% reduce the number of units to be reworked in house by 5,000 units 2,000 units Reduce the number of repairs on customer premises by Reduce lost reputation by 4,000 units 200 units For simplicity of comparisons assume that other than the changes considered above the details will be the same as from 1 October 2021 to 31 March 2022 costs, to indicate whether the suggested Show calculations for all activities and changes would be beneficial (8 marks) d) Comment briefly on the results (3 marks) (total 25 marks)