The CEO of

BobBob

Snacks Corp. is concerned about the amount of resources currently spent on customer warranty claims. Each box of snacks is printed with the following logo: "Satisfaction guaranteed or your money back." Since the number of claims is high, she would like to evaluate what costs are being incurred to ensure the quality of the product.

Cost of disposal of rejected products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		$14,000
Preventative maintenance on factory equipment. . . . . . . . . . . . . . . . . . . . . . . . .		$9,000
Production loss due to machine breakdowns. . . . . . . . . . . . . . . . . . . . . . . . . . . .		$11,000
Inspection of raw materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		$2,000
Warranty claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		$390,000
Cost of defective products found at the inspection point. . . . . . . . . . . . . . . . . . .		$79,000
Training factory personnel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		$23,000
Recall of Batch #59374. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		$226,000
Inspecting products when halfway through the production process. . . . . . . . .		$46,000

1.	Prepare a Costs of Quality report. In addition to listing the costs by category, determine the percentage of the total costs of quality incurred in each cost category.
2.	Do any additional subjective costs appear to be missing from the report?
3.	What can be learned from the report?

Costs of Quality Report for

Total Costs

Percentage of Total Costs

Bob Snackfoods

of Quality

of Quality (Rounded)

Prevention Costs:

Total prevention costs

%

Appraisal Costs:

Total appraisal costs

%

Internal Failure Costs:

Total internal failure costs

%

External Failure Costs:

Total external failure costs

%

Total Costs of Quality

%