Mercury incorporstes, produces cell phones stits plant in Texas. In recent years, the company's market share has been erodes by uif competition from overses. Price and product quality are the two key sees in which companies compete in this market A year ago the company's cell phones ad been rankedow in product quity in a consumer survey. Shocked by this result. Jorge Gomez Mercury's president in tistes en Interse set to more product quality Gomerset up ask force to implements forma 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 belle e chet this was companywide program and thet all employees should share the responsibility for ss success After the first meeting of the task force, Holly Esce, manager of the Marketing Department, asked John Tran, production manager what he thought of the proposed arogram. Tran relles, have reservations. Ouaitys too abstract to be sttsching costs to and then to be holding you and me responsible for cost improvements. I like to work with goals that can see and count! I'm nervous about having my ennusl bonus based on a decrease in quality costs; there are too many variables that we have no control over Mercury's qusty improvement program has now been in operation for one year. The company's most recent cuity cost reports shown below. Mercury, Corporated Quality Cost Report (i thanda Last Year This Year Prevention costs. chine interace $150 Training suppliers Quality Circles 25 Total provato cost 238 Appraisal costs Inconin inspection Final testing 15a Total appraisal cost Internal fallur costs 168 ba Scrap 68 Total internal failure o 158 Esmal failure costs: warranty repairs Customer return 258 Total extemal failure out 318 108 Total quality cost $825 $ 573 Total produktion cost $ 4,100 $ 4,500 za 25a 45 28 9a 128 05 45 105 68 28 88 As they were re/ewing the report, Esoe asked Tren what he now thought of the quality improvement program. Tran replies. I'm releved that the new que improvement program naso't hurt our bonuses, but the program has incressed the workload in the Production Department its true that customer returns are way down, but the cel phares that were returned by customers to reta outlets were rarely sent back to us for rework. Required: Expand the company's quality cost report by showing the costs in both years as gercentages of both total production cost and total quality cost (Round your percentage answers to 1 decimal place ile 0.1234 should be entered as 12.3).) Maroury, Incorporated Quality Cost Raport in thousanda) Last Year Paroantage of Parcentage of Total Production Total Quality Cost Thit Year Parcentage of Total Produotion Coct Amount Amount Parcentage of Total Quality Coct Cost s 150 200 4 25 230 10 901 250 45 150 196 20 30 110 Prevention Machine maintenance Training suppliers Osity circles Total provisionais Appraisal costs Incoming inspection Finasting Total Appraisal intomi allure costs Rework Scrap Total intom tre costs Ecomaluroots Vibrantyopains Customer roma Total catamaralune costs Total Quality cost Total production 100 50 45 180 106 201 50 260 310 893 s s 5 $ 100 53 4.500
