Item 1 In response to intensive foreign competition, the management of Florex Company has attempted over the past year to improve the quality of its products. A statistical process control system has been installed and other steps have been taken to decrease the amount of warranty and other field costs, which have been trending upward over the past several years. Costs relating to quality and quality control over the last two years are given below: Costs (in thousands) Last Year This Year Inspection $ 675 $ 1,380 Quality engineering $ 450 $ 675 Depreciation of test equipment $ 525 $ 285 Rework labor $ 1,230 $ 1,500 Statistical process control $ 0 $ 300 Cost of field servicing $ 1,275 $ 1,050 Supplies used in testing $ 30 $ 60 Systems development $ 750 $ 750 Warranty repairs $ 3,600 $ 1,200 Net cost of scrap $ 390 $ 1,230 Product testing $ 870 $ 1,125 Product recalls $ 2,325 $ 750 Disposal of defective products $ 900 $ 1,050 Sales have been flat over the past few years, at $75,000,000 per year. A great deal of money has been spent in the effort to upgrade quality, and management is anxious to see whether or not the effort has been effective. Required: 1. Prepare a quality cost report that contains data for both this year and last year. (Enter amount values in thousands. Round your percentage answers to 2 decimal places (i.e 0.1234 should be entered as 12.34).)

In response to intensive foreign competition, the management of Florex Company has attempted over the past year to improve the quality of its products. A statistical process control system has been installed and other steps have been taken to decrease the amount of warranty and other field costs, which have been trending upward over the past several years. Costs relating to quality and quality control over the last two years are given below: Inspection Quality engineering Depreciation of test equipment Rework labor Statistical process control Cost of field servicing Supplies used in testing Systems development Warranty repairs Net cost of scrap Product testing Product recalls Disposal of defective products Costs (in thousands) Last This Year Year $ 675 $ 1,380 $ 450 $ 675 $ 525 $ 285 $ 1,230 $ 1,500 $ 0 $ 300 $ 1,275 $ 1,050 $ 30 $ 60 $ 750 $ 750 $ 3,600 $ 1,200 $ 390 $ 1,230 $ 870 $ 1,125 $ 2,325 $ 750 $ 900 $ 1,050 Sales have been flat over the past few years, at $75,000,000 per year. A great deal of money has been spent in the effort to upgrade quality, and management is anxious to see whether or not the effort has been effective. Required: 1. Prepare a quality cost report that contains data for both this year and last year. (Enter amount values in thousands. Round your percentage answers to 2 decimal places (i.e 0.1234 should be entered as 12.34).) Florex Company Quality Cost Report Last Year Amount (in Percent of thousands) Sales This Year Amount (in Percent of thousands) Sales Prevention costs: % Total prevention costs Appraisal costs Total appraisal costs Internal failure costs: Total internal failure costs External failure costs: Total external failure costs Total quality cost