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    The Hartono Corporation manufactures and sells industrial grinders. The following table presents financial information pertaining to quality in 2004 and 2005 (in thousands):

    2005 2004
    __________________________________________________________________________
    Revenues $12,500 $10,000
    Inspection of production 85 110
    Scrap 200 250
    Design engineering 240 100
    Cost of returned goods 145 60
    Product-testing equipment 50 50
    Customer support 30 40
    Rework costs 135 160
    Preventive equipment maintenance 90 35
    Product liability claims 100 200
    Incoming materials inspection 40 20
    Breakdowm maintenance 40 90
    Product-testing labor 75 220
    Training 120 45
    Warranty repair 200 300
    Supplier evaluation 50 20

    _________________________________________________________________________
    1. Classify the cost items in the table into prevention, appraisal, internal failure, or external failure categories.

    2. Calculate the ratio of each COQ(cost of quality) category to revenues in 2004 and 2005. Comment on the trends in costs of quality between 2004 and 2005.

    3. Give two examples of nonfinancial quality measures that Hartono Corporation could monitor as part of a total quality-control effort.

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    https://brainmass.com/business/quality-management/quality-costs-112743

    Solution Summary

    The solution explains how to classify the different costs as prevention, appraisal, internal failure, or external failure.

    $2.49

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