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Mercury, Incorporated, produces cell phones at its plant in Texas. A year ago, a consumer...

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Accounting

Mercury, Incorporated, produces cell phones at its plant in Texas. A year ago, a consumer survey ranked the companys cell phones low in product quality. Shocked by this result, Jorge Gomez, Mercurys president, set up a task force to implement a formal quality improvement program. Included on this task force were representatives from the Engineering, Marketing, Customer Service, Production, and Accounting departments. After working together for a year, the task force prepared the quality cost report shown below:
Mercury, Incorporated
Quality Cost Report
(in thousands)
Last Year This Year
Prevention costs:
Machine maintenance $ 80 $ 135
Training suppliers 025
Quality circles 035
Total prevention cost 80195

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