Question
XWS Company produces machinery. Information on sales and quality costs - relating to parts A, B & C: Sales $1,250,000 Inspection $40,000 Scrap $5,000 Rework
XWS Company produces machinery. Information on sales and quality costs - relating to parts A, B & C: Sales $1,250,000 Inspection $40,000 Scrap $5,000 Rework $22,500 Quality training $10,000 Warranty work $50,000 Customer complaints $15,000 Information relating to a proposed new machine - relating to all parts other than A, B & C: Direct materials costs (per machine) $5,000 Direct labor costs (per machine) $1,500 Overhead costs (per machine) $2,000 Estimated selling price (per machine) $10,000 Target profit (as a percentage of selling price) 13 SQ4 Required A. classify and aggregate (total-up) each of the quality-related costs under the four cost of quality (COQ) categories. B. the percentage of sales that is accounted for by quality-related costs; total & per CoQ category C. the profit increase the company could have achieved if its quality-related costs could have been reduced from your calculation in question part B to the following a CoQ as a percentage of sales result: 5% D. the company's target cost for the new machine Activate Windows E. comment on whether the company should manufacture the new machine - specify yes' or 'no' and in one sentence justify your conclusion F. list 2 potential benefits and 2 potential risks of just in time production
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