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Inspection of electrical components purchased from outside suppliers: $28,000 Costs of rework on faulty chips discovered internally: $90,900 Replacement of faulty chips already sold under
Inspection of electrical components purchased from outside suppliers: $28,000 Costs of rework on faulty chips discovered internally: $90,900 Replacement of faulty chips already sold under warranty: $181,000 Costs of scrapped defective parts discovered during the manufacturing process: $46,000 Training of quality control inspectors: $18,000 Tests of chips prior to sale: $10,200 When you consult the sales manager about the warranty costs, he informs you that last month 5% of products were returned by customers because of defects. Upon receipt of the report, the financial controller says that she is desperate to make cost savings and believes that delaying further training of quality control inspectors and suspending inspection and testing will be "quick wins" in reducing quality related costs. She is also keen to reduce the other costs in the report but is less clear that this can be done quickly Required: Prepare the cost of quality report requested by the financial controller (in $ and %, including headings and sub- headings). (7.5 Marks)
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