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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

Mercury, Incorporated, produces cell phones at its plant in Texas. A year ago, a consumer survey ranked the companys cell phones low in product quality. Shocked by this result, Jorge Gomez, Mercurys 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:
Mercury, Incorporated
Quality Cost Report
(in thousands)
Last Year This Year
Prevention costs:
Machine maintenance $ 70 $ 120
Training suppliers 010
Quality circles 020
Total prevention cost 70150
Appraisal costs:
Incoming inspection 2040
Final testing 8090
Total appraisal cost 100130
Internal failure costs:
Rework 50130
Scrap 4070
Total internal failure cost 90200
External failure costs:
Warranty repairs 9030
Customer returns 32080
Total external failure cost 410110
Total quality cost $ 670 $ 590
Total production cost $ 4,200 $ 4,800
Required:
1. Expand the companys 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).

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