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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
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 $28,800, whereas no. 172 typically sells for approximately $26,900. The company is very concerned about quality and has provided the following information Number of machines produced and sold Warranty costs: Average repair cost per unit Percentage of units needing repair) Reliability engineering at $120 per hour Rework at AT's manufacturing plant: Average rework cost per unit Percentage of units needing rework Manufacturing inspection at $50 per hour Transportation costs to customer sites to fix problems Quality training for employees Required: No. 165 No. 172 100 170 $ 840 65% 1,570 hours 290 10% 1,970 hours 20% 440 hours $ 1,840 $ 1,540 30% 270 hours $28,300 $33,800 $14,400 $48,800 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 prevention, appraisal, internal failure, and external failure costs as a percentage of total quality 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 revenues. 3-b. Using the classifications in requirement 1, compute AT's 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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