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Precision Electric Instruments manufacturers fans for mini and microcomputers. As a first step to focus on quality improvements, the firm has compiled the following operating
Precision Electric Instruments manufacturers fans for mini and microcomputers. As a first step to focus on quality improvements, the firm has compiled the following operating data for 2022 (in thousands): Line inspection Training Returns Warranty repairs Preventive equipment maintenance Recalls Design engineering Scrap (net of salvage value) Downtime Product-testing equipment Product liability insurance Supplier evaluation Rework Inspection and testing of incoming materials $ 51 116 96 64 16 153 63 26 36 84 16 11 31 21 236 Litigation costs to defend allegation of defective products Required: Prepare a cost-of-quality (COQ) report and classify the costs as prevention, appraisal, internal failure, and external failure. Express each category subtotal as a percentage of total COQ. (Round "Percent of Total" answers to 1 decimal place.) Cost-of-Quality (COQ) Report For the Year 2022 Prevention costs: Training Preventive equipment maintenance Design engineering Supplier evaluation Total prevention costs Appraisal costs: Line inspection Product-testing equipment Inspection and testing of incoming materials Total appraisal costs $ 116 16 63 11 Percent of Total $ 206 20.2 % $ 51 84 21 EA $ 156 15.3 % Internal failure costs: Scrap (net) Downtime Rework $ 26 26 36 31 Total internal failure costs $ 93 9.1 % External failure costs: Returns Warranty repairs Recalls Product liability insurance Litigation costs EA $ 96 64 153 16 236 Total external failure costs $ 565 55.4 % Total cost of quality (COQ) EA $ 1,020 100.0 %
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