Industrial Technologies, Inc. (ITI), 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 $30,000, whereas no. 172 typically sells for approximately

$27,500. The company is very concerned about quality and has provided the following information:

No. 165 No. 172

Number of machines produced and sold. 160 200

Warranty Costs:

Average Repair cost per unit . $900 $350

Percentage of units needing repair. 70% 10%

Reliability engineering at $150 per hour . 1,600 hrs 2,000 hrs

Rework at ITTs manufacturing plant

Average rework cost per unit. $1,900 $1,600

Percentage of units needing rework.. 35% 25%

Manufacturing Inspection at $50 per hour.. 300 hrs 500 hrs

Transportation costs to customer sites to fix problems. $29,500 $15,000

Quality training for employees.. $35,000 $50,000

2. Using the classifications in requirement (1), compute ITI's quality costs for machine no. 165 in dollars and as a percentage of sales revenues. Also calculate prevention, appraisal, internal failure, and external failure costs as a percentage of total quality costs.