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Costs of quality

Precise had sales of 18,000,000 in both Year 2 and Year 1, and incurred the following costs related to quality control during those years:

Year 2 Year 1

Inspection 61000 30000
Quality Engineering 57000 12000
Quality training programs 26000 39000
customer Allowances 22000 104000
Scrap, net 25000 8000
Product testing 92000 42000
Rework 130000 68000
Statistical process control 50000 34000
Downtime due to defects 25000 18000
Warranty repairs 75000 189000
Field Service 45000 143000
Testing Supplies 15000 16000

A. Categorize the costs and compute the total costs of conformance for each year by category
B. Evaluate the distribution of quality costs at Precise. Discuss the distribution of quality costs and any trends in cost distribution. What effect does the distribution of quality costs have on total quality at Precise? Explain
C. What future trends should Precise expect if the current focus of quality programs continues? Explain

Solution Summary

The solution explains how to categorise the various costs of quality and the trend in quality costs.