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Advanced Technologies (AT) produces two compression machines that are popular with manufacturers of plastics: no. 165 and no. 172 Machine no. 165 has an average
Advanced Technologies (AT) produces two compression machines that are popular with manufacturers of plastics: no. 165 and no. 172 Machine no. 165 has an average selling price of $30,000, whereas no. 172 typically sells for approximately $27,500. The company is very concerned about quality and has provided the following information No. 165 No. 172 Number of machines produced and sold Warranty costs: 160 200 Average repair cost per unit Percentage of units needing repair $ 900 $ 350 65% 10% Reliability engineering at $150 per hour Rework at AT's manufacturing plant: 1,600 hours 2,000 hours Average rework cost per unit $ 1,900 $1,600 25% 300 hours 20% 500 hours Percentage of units needing rework Manufacturing inspection at $40 per hour Transportation costs to customer sites to fix problems Quality training for employees $29,500 $35,000 $15,000 $50,000 Required: 1. Classify the preceding costs as prevention, appraisal, internal failure, or external failure 2-a. Using the classifications in requirement (1), compute AT's quality costs for machine no. 165 in dollars and as a percentage of sales 2-b. Using the classifications in requirement (1), compute AT's calculate prevention, appraisal, internal failure, and external failure costs 3-a. Using the classifications in requirement (1), compute AT's quality costs for machine no. 172 in dollars and as a percentage of sales 3-b. Using the classifications in requirement (1), compute AT's calculate prevention, appraisal, internal failure, and external failure costs revenues as a percentage of total quality costs. revenues as a percentage of total quality costs. 4. Is the company "investing" its quality expenditures differently for the two machines
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