ISBN 978-1-259-56956-2

Advanced Technologies (AT) 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 $60,000, whereas no. 172 typically sells for approximately $55,000. The company is very concerned about quality and has provided the following information: No. 165 80 No. 172 Number of machines produced and sold Warranty costs: 100 $ 1,200 Average repair cost per unit Percentage of units needing repair 400 70% 10% Reliability engineering at $150 per hour Rework at AT's manufacturing plant: 1,600 hours 2,000 hours Average rework cost per unit $ 1,900 $ 1,600 35% 300 hours 25% 500 hours Percentage of units needing rework Manufacturing inspection at $50 per hour Transportation costs to customer sites to fix problems Quality training for employees $29,500 $35,000 $15,000 $50,000 Required: 1. Classify the preceding costs as prevention, appraisal, internal failure, or external failure 2-a. Using the classifications in requirement (1), compute AT's quality costs for machine no. 165 in dollars and as a percentage of sales 2-b. Using the classifications in requirement (1), compute AT's calculate prevention, appraisal, internal failure, and external failure costs 3-a. Using the classifications in requirement (1), compute ATs quality costs for machine no. 172 in dollars and as a percentage of sales 3-b. Using the classifications in requirement (1), compute AT's calculate prevention, appraisal, internal failure, and external failure costs revenues as a percentage of total quality costs revenues as a percentage of total quality costs 4. Is the company "investing" its quality expenditures differently for the two machines