Mercury, Inc., produces cell phones at its plant in Texas. In recent years, the companys market share has been eroded by stiff competition from overseas. Price and product quality are the two key areas in which companies compete in this market.

A year ago, the companys cell phones had been ranked low in product quality in a consumer survey. Shocked by this result, Jorge Gomez, Mercurys president, initiated a crash effort to improve product quality. Gomez set up a task force to implement a formal quality improvement program. Included on this task force were representatives from the Engineering, Marketing, Customer Service, Production, and Accounting departments. The broad representation was needed because Gomez believed that this was a companywide program and that all employees should share the responsibility for its success.

After the first meeting of the task force, Holly Elsoe, manager of the Marketing Department, asked John Tran, production manager, what he thought of the proposed program. Tran replied, I have reservations. Quality is too abstract to be attaching costs to it and then to be holding you and me responsible for cost improvements. I like to work with goals that I can see and count! Im nervous about having my annual bonus based on a decrease in quality costs; there are too many variables that we have no control over.

Mercurys quality improvement program has now been in operation for one year. The companys most recent quality cost report is shown below.

PLEASE SHOW ALL STEPS IT TAKES TO GET TO THE ANSWER. I'D LIKE TO LEARN HOW TO WORK THESE PROBLEMS NOT JUST GET THE ANSWER.

Mercury, Inc., produces cell phones at its plant in Texas. In recent years, the company's market share has been eroded by stiff competition from overseas. Price and product quality are the two key areas in which companies compete in this market A year ago, the company's cell phones had been ranked low in product quality in a consumer survey Shocked by this result, Jorge Gomez, Mercury's president, initiated a crash effort to improve product quality Gomez set up a task force to implement a fommal quality improvement program. Included on this task force were representatives from the Engineering, Marketing, Customer Service, Production, and Accounting departments. The broad representa was needed because Gomez believed that this was a companywide program and that all employees should share the responsibility for its success. After the first meeting of the task force, Holly Elsoe, manager of the Marketing Department, asked John Tran, production manager, what he thought of the proposed program. Tran replied, "I have reservations Quality is too abstract to be attaching costs to it and then to be holding you and me responsible for cost improvements. like to work with goals that I can see and count! lm nervous about having my annual bonus based on a decrease in quality costs, there are too many variables that we have no control over Mercury's quality improvement program has now been in operation for one year. The company's most recent quality cost report is shown below Mercury, Inc. Quality Cost Report n thousands Last Year This Year Prevention costs 260 130 Machine maintenance Training suppliers 10 Quality circles 26 85 Total prevention costs 290 225 Appraisal costs Incoming inspection 60 Final testing 180 89 Total appraisal costs 240 121 Internal failure costs Rework 160 60 72 Scrap 45 Total internal failure costs 232 105 External failure costs: Wamanty repairs 67 Customer returns 262 90 Total external failure costs 329 124 1,091 575 Total quality cost 4,160 4,560 Total production cost As they were reviewing the report, Elsoe asked Tran what he now thought of the quality improvement program. Tran replied. "I'm relieved that the new quality improvement program hasn't hurt our bonuses, but the program has increased the workload in the Production Department It is true that customer returns are way down, but the cell phones that were returned by customers to retail outlets were rarely sent back to us for rework Required 1. Expand the company's quality cost report by showing the costs in both years as percentages of both total production cost and total quality cost. Round your percentage answers to 1 decimal p 0.1234 should be entered a 12.3)