Activity-Based Quality Costing

Abernathy, Inc., produces two different generators and is concerned about their quality. The company has identified the following quality activities and costs associated with the two products:

Generator A Generator 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 $816,000

Scrapping units 612,000

Inspecting 306,000

Quality training 85,000

Required:

1.Calculate the quality cost per unit for each product, and break this unit cost into quality cost categories. If required, round your answers to the nearest cent.

Generator A Generator B

Unit cost $ $

Which of the two seems to have the lowest quality?

Generator A