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Chapter $17$ Homework

$($i

$10$ points

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Acme Materials Company manufactures and sells synthetic coatings that can withstand high temperatures. Its primary customers are aviation manufacturers and maintenance companies. The following table contains financial information pertaining to cost of quality $($COQ$)$ in $20$X$1$ and $20$X$2($in thousands of dollars$)$:

$\backslash$table$[[,,20$X$1,20$X$2],[$Sales$,,$$ $15,100,$$ $19,100],[$Materials inspection,,$210,51],[$In$-$process $($production$)$ inspection,,$151,116],[$Finished product inspection,,$160,61],[$Preventive equipment maintenance,,$11,51],[$Scrap $($net$),,410,210],[$Warranty repairs,,$610,360],[$Product design engineering,,$141,180],[$Vendor certification,,$29,51],[$Direct costs of returned goods,,$185,71],[$Training of factory workers,,$31,131],[$Product testing$-$equipment maintenance,,$51,51],[$Product testing labor,$t,120,81],[$Field repairs,,$61,31],[$Rework before shipment,,$150,191],[$Product$-$liability settlement,,$270,51],[$Emergency repair and maintenance,,$110,66]]$

Required:

Classify the cost items in the table into cost$-$of$-$quality $($COQ$)$ categories.

Calculate the ratio of each COQ category to revenues in each of the $2$ years.

Calculate the percentage change in each COQ category and total COQ and comment on the results:

a$.$ Percentage change in total COQ as a percentage of sales, from $20$X$1$ to $20\backslash$times $2$;

b$.$ Total COQ in $20$X$2$ expressed as a percentage of $20$X$1$ sales dollars;

c$.$ Percentage change in total prevention costs, $201$ to $202$;

d$.$ Percentage change in total appraisal costs, $20$X$1$ to $20$X$2$;

e$.$ Percentage change in total internal failure costs, $201$ to $20$X$2$;

f$.$ Percentage change in total external failure costs, $20$X$1$ to $202.$

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