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 | |||
What are the first quarters total prevention, appraisal, internal failure, and external failure costs? What are the same four amounts for the second quarter?
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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? (Round your answers to 1 decimal place.)
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