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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 $30,900, whereas no. 172 typically sells for approximately $29,300. 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: 210 245 Average repair cost per unit Percentage of units needing repair $ 950 $440 70% 10% Reliability engineering at $240 per hour Rework at AT's manufacturing plant: 1,690 hours 2,045 hours Average rework cost per unit $ 1,990 1,645 25% 390 hours Percentage of units needing rework Manufacturing inspection at $50 per hour Transportation costs to customer sites to fix problems Quality training for employees 20% 545 hours $30,400 $35,900 $15,900 $51,800 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 revenues 2-b. Using the classifications in requirement (1), compute AT's calculate prevention, appraisal, internal failure, and external failure costs as a percentage of total quality costs 3-a. Using the classifications in requirement (1), compute ATs quality costs for machine no. 172 in dollars and as a percentage of sales revenues 3-b. Using the classifications in requirement (1), compute AT's calculate prevention, appraisal, internal failure, and external failure costs as a percentage of total quality costs 4. Is the company "investing" its quality expenditures differently for the two machines
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