The Janelle Company operates as three autonomous divisions. Each division has a general manager in charge of product development, production, and distribution. Management recently adopted total quality management, and the divisions now track, record, and analyze their costs and nonfinancial measures of quality. All three divisions are operating in highly competitive marketplaces. Sales and quality-related data for April are summarized on the next page.

Required
1. Prepare an analysis of the costs of quality for the three divisions. Categorize the costs as
(a) Costs of conformance, with subsets of prevention costs and appraisal costs, or
(b) Costs of nonconformance, with subsets of internal failure costs and external failure costs.
Compute the total costs for each category for each division.
2. For each division, compute the percentage of sales represented by prevention costs, appraisal costs, total costs of conformance, internal failure costs, external failure costs, total costs of nonconformance, and total costs of quality.
3. Interpret the cost-of-quality data for each division. Is each division’s product of high or low quality? Explain your answers. Are the divisions headed in the right direction to be competitive?
4. Manager Insight: Evaluate the nonfinancial measures of quality in terms of customer satisfaction. Are the results consistent with your analysis in 3? Explain youranswers.

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500,000 $9,500,000 513,000,000 Quality training of Customer complaint Process engineering sampling and testing 24,700 $1,156,000 ,292,000 $1,768,000 3,410 1 Customer complaints Number of 2