Organizational Innovations... 167 Exercise 5 (Costs of Quality Analysis, Nonfinancial Quality Measures) Canada Industries manufactures two types of refrigerators, Victoria and Vancouver. Information on each refrigerator is as follows: Units manufactured and sold Victoria Selling price 10,000 units Variable costs per unit P2,000 Vancouver 5,000 units P1,500 Hours spent on design P1,200 P800 Testing and inspection hours per unit 6,000 1,000 0.5 Percentage of units reworked in plant 5% 10% Rework costs per refrigerator P500 P400 Repair costs per refrigerator Percentage of unit repaired at customer site 4% 8% P600 P450 Estimated lost sales from poor quality 300 units The labor rates per hour for various activities are as follows: Design Testing and inspection P75 per hour P40 per hour Required: 1. Calculate the costs of quality for Victoria and Vancouver, classified into prevention, appraisal, internal failure, and external failure categories. 2. For each type of refrigerator, calculate the ratio of each COQ category as a percentage of revenues. Compare and comment on the costs of quality for Victoria and Vancouver. 3. Give two examples of nonfinancial quality measures that Canada Industries could monitor as part of a total quality-control effort.