Question
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
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
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sing PivotChart again, create a stacked bar chart that includes a total of two barsone for each quarter. Each bar should quantify that quarters total quality costs as a percent of that quarters sales. It should also depict each of the four quality cost categories (i.e., prevention, appraisal, internal failure, and external failure) as a percent of sales. Based on a review of your bar chart, answer the following questions: (Round your answers to 2 decimal places.)
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