Calculate the relative distribution percentages for each quality cost category. Round percentages to one decimal place if rounding is required. For example, 5.789% would be entered as "5.8". Prevention fill in the blank f53288f73071ff5_1 % Appraisal fill in the blank f53288f73071ff5_2 % Internal failure fill in the blank f53288f73071ff5_3 % External failure fill in the blank f53288f73071ff5_4 % Comment on the distribution. Quality Cost Report, Taguchi Loss Function Kathy Shorts, president of Oliver Company, was concerned with the trend in sales and profitability. The company had been losing customers at an alarming rate. Furthermore, the company was barely breaking even. Investigation revealed that poor quality was at the root of the problem. At the end of 20x5, Kathy decided to begin a quality improvement program. As a first step, she identified the following costs in the accounting records as quality related: 20x5 Sales (644,000 units @ $100) $64,400,000 Retesting 2,125,200 Rework 2,382,800 Vendor certification 901,600 Consumer complaints 1,545,600 Warranty 2,382,800 Test labor 1,932,000 Inspection labor 1,416,800 Design reviews 257,600 Required: 3. Using the Taguchi loss function, an average loss per unit is computed to be $14 per unit. What are the hidden costs of external failure? $fill in the blank How does this affect the relative distribution? 4. Shorts's quality manager decided not to bother with the hidden costs since any efforts to reduce measured external failure costs will also reduce the hidden costs. Do you agree or disagree?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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2. Calculate the relative distribution percentages for each quality cost category. Round percentages to one decimal place if rounding is required. For example, 5.789% would be entered as "5.8".

Prevention	fill in the blank f53288f73071ff5_1	%
Appraisal	fill in the blank f53288f73071ff5_2	%
Internal failure	fill in the blank f53288f73071ff5_3	%
External failure	fill in the blank f53288f73071ff5_4	%

Comment on the distribution.

Quality Cost Report, Taguchi Loss Function

Kathy Shorts, president of Oliver Company, was concerned with the trend in sales and profitability. The company had been losing customers at an alarming rate. Furthermore, the company was barely breaking even. Investigation revealed that poor quality was at the root of the problem. At the end of 20x5, Kathy decided to begin a quality improvement program. As a first step, she identified the following costs in the accounting records as quality related:

	20x5
Sales (644,000 units @ $100)	$64,400,000
Retesting	2,125,200
Rework	2,382,800
Vendor certification	901,600
Consumer complaints	1,545,600
Warranty	2,382,800
Test labor	1,932,000
Inspection labor	1,416,800
Design reviews	257,600

Required:

3. Using the Taguchi loss function, an average loss per unit is computed to be $14 per unit. What are the hidden costs of external failure?

$fill in the blank

How does this affect the relative distribution?

4. Shorts's quality manager decided not to bother with the hidden costs since any efforts to reduce measured external failure costs will also reduce the hidden costs. Do you agree or disagree?

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