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Mercury, Incorporated, produces cell phones at its plant in Texas. A year ago, a consumer survey ranked the company's cell phones low in product quality.
Mercury, Incorporated, produces cell phones at its plant in Texas. A year ago, a consumer survey ranked the company's cell phones low in product quality. Shocked by this result, Jorge Gomez, Mercury's president, 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. After working together for a year, the task force prepared the quality cost report shown below: 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. Note: Round your percentage answers to 1 decimal place (i.e 0.1234 should be entered as 12.3). \begin{tabular}{|c|c|c|c|c|c|c|} \hline \multicolumn{7}{|c|}{ (in thousands) } \\ \hline & \multicolumn{3}{|c|}{ Last Year } & \multicolumn{3}{|c|}{ This Year } \\ \hline & Amount & \begin{tabular}{c} Percentage of \\ Total Production \\ Cost \end{tabular} & \begin{tabular}{c} Percentage of \\ Total Quality \\ Cost \end{tabular} & Amount & \begin{tabular}{c} Percentage of \\ Total Production \\ Cost \end{tabular} & \begin{tabular}{c} Percentage of \\ Total Quality \\ Cost \end{tabular} \\ \hline \multicolumn{7}{|l|}{ Prevention costs: } \\ \hline Machine maintenance & 84 & & & 134 & & \\ \hline Training suppliers & 0 & & & 24 & & \\ \hline Quality circles & 0 & & & 34 & & \\ \hline Total prevention costs & 84 & & & 192 & & \\ \hline \multicolumn{7}{|l|}{ Appraisal costs: } \\ \hline Incoming inspection & 34 & & & 54 & & \\ \hline Final testing & 94 & & & 104 & & \\ \hline Total appraisal costs & 128 & & & 158 & & \\ \hline \multicolumn{7}{|l|}{ Internal failure costs: } \\ \hline Rework & 64 & & & 144 & & \\ \hline Scrap & 54 & & & 84 & & \\ \hline Total internal failure costs & 118 & & & 228 & & \\ \hline \multicolumn{7}{|l|}{ External failure costs: } \\ \hline Warranty repairs & 104 & & & 44 & & \\ \hline Customer returns & 334 & & & 94 & & \\ \hline Total external failure costs & 438 & & & 138 & & \\ \hline Total quality cost & 768 & & & 716 & & \\ \hline Total production cost & 4,900 & & & 5,500 & & \\ \hline \end{tabular}
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