Harvey Company designs and produces surgical lasers. Its product is brilliantly designed, but the manufacturing process has been plagued by chronic quality control problems. To help address the situation, Harvey formed a cross-functional team of managers that quantified its costs of quality over the last two quarters as follows:

	Costs (in thousands)
	Quarter 1				Quarter 2
Cost of testing equipment	$	270			$	390
Customer returns of defective goods	$	3,200			$	200
Downtime due to quality problems	$	600			$	1,100
Inspection	$	1,700			$	2,770
Net cost of scrap	$	800			$	1,300
Product recalls	$	3,500			$	600
Quality engineering	$	1,080			$	1,650
Rework labor	$	1,400			$	1,600
Statistical process control	$	0			$	270
Supplies used in testing	$	30			$	40
Systems development	$	120			$	680
Warranty repairs	$	3,300			$	2,800

The companys sales were $95 million in Quarter 1 and $100 million in Quarter 2. Click here to download the Excel template, which you will use to answer the questions that follow.

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Excel Analytics 12-1 (Static) Part 2

2. Go to the tab titled Template B:

a. Use VLOOKUP to identify the proper quality cost classification that should appear in cells B6 through B17. (Hints: Your VLOOKUP formula in cell B6 will refer to Template A to find the cost that matches the description in cell A6 of Template B. Once a match is found your formula will instruct Excel to take the corresponding cost classification from Template A and insert it into cell B6 of Template B. Use absolute references where needed when creating your formula in cell B6 because this will enable you to copy the formula into cells B7 through B17.)

b. What quality cost classification should appear in cells B9, B12, and B17?

c. Using Exhibit 12-7 as your guide, prepare a quality cost report for Quarters 1 and 2. Your quality cost report should list prevention costs first followed by appraisal, internal failure, and external failure costs. (Hints: First, sort all rows of data by quality cost classification (A-Z). Second, select cells A5 through H17 and use the Excels subtotal function to create subtotals within columns C through H by classification type.

d. What are the first quarters total prevention, appraisal, internal failure, and external failure costs? What are the same four amounts for the second quarter?

e. What are the first quarters total prevention, appraisal, internal failure, and external failure costs each stated as a percent of the first quarters total cost of quality? What are the same four percentages for the second quarter?

f. What are the first quarters total prevention, appraisal, internal failure, and external failure costs each stated as a percent of the first quarters sales? What are the same four percentages for the second quarter?