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Mercury's quality improvement program has now been in operation for one year. The company's most recent quality cost report is shown below. Prevention costs:
Mercury's quality improvement program has now been in operation for one year. The company's most recent quality cost report is shown below. Prevention costs: Machine maintenance Training suppliers Quality circles Total prevention cost Appraisal costs: Mercury, Incorporated Quality Cost Report (in thousands) Incoming inspection Final testing Total appraisal cost Last Year This Year $ 270 $ 140 5 12 25 90 300 242 40 20 185 90 225 110 Internal failure costs: Rework 110 62 Scrap 74 50 es Total internal failure cost 184 112 External failure costs: Warranty repairs Total external failure cost 68 36 264 92 332 128 $ 592 Customer returns Total quality cost Total production cost $ 1,041 $ 4,170 $ 4,570 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 place (i.e 0.1234 should be entered as 12.3).) Mercury, Incorporated
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