Django Industries conducted an appraisal of all costs associated with production and found the following data.Scheduled maintenance$35,000Machine downtime$160,000Annual equipment calibration$39,000Warranty exchange$125,000Supplier quality audits$75,000Equipment repair$56,000Customer field repairs$97,000Incoming material audits$80,000Categorize these costs into the traditional four types of quality costs. What is the cumulative percentage of the two highest categories? a. 70.2% b. 65.6% c. 68.4% d. 71.8%

The objective of the question is to categorize the given costs into the traditional four types of quality costs and then calculate the cumulative percentage of the two highest categories. The four types of quality costs are prevention costs, appraisal costs, internal failure costs, and external failure costs.First, let's categorize the costs. Prevention costs are costs associated with preventing defects before they happen. In this case, 'Scheduled maintenance' ($35,000) and 'Annual equipment calibration' ($39,000) fall under this category. The total prevention costs are $35,000 + $39,000 = $74,000.Appraisal costs are costs incurred to determine the degree of conformance to quality requirements. Here, 'Supplier quality audits' ($75,000) and 'Incoming material audits' ($80,000) are appraisal costs. The total appraisal costs are $75,000 + $80,000 = $155,000.Internal failure costs are costs resulting from defects that are discovered during the production of a service or product. 'Machine downtime' ($160,000) and 'Equipment repair' ($56,000) are internal failure costs. The total internal failure costs are $160,000 + $56,000 = $216,000.External failure costs are costs that occur after a product is shipped and are associated with defects found by the customer. 'Warranty exchange' ($125,000) and 'Customer field repairs' ($97,000) are external failure costs. The total external failure costs are $125,000 + $97,000 = $222,000.The total quality costs are the sum of all these costs, which is $74,000 (prevention) + $155,000 (appraisal) + $216,000 (internal failure) + $222,000 (external failure) = $667,000.The two highest categories are internal failure costs ($216,000) and external failure costs ($222,000). The cumulative cost of these two categories is $216,000 + $222,000 = $438,000.To find the cumulative percentage of these two categories, we divide the cumulative cost by the total cost and multiply by 100. So, the cumulative percentage is ($438,000 / $667,000) * 100 = 65.67%.The costs were categorized into the four types of quality costs: prevention, appraisal, internal failure, and external failure. The cumulative percentage of the two highest categories, internal failure and external failure, was calculated to be approximately 65.67%. Therefore, the closest answer is 65.6% (option b).

Answered: Django Industries conducted an…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

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Scheduled maintenance	$35,000
Machine downtime	$160,000
Annual equipment calibration	$39,000
Warranty exchange	$125,000
Supplier quality audits	$75,000
Equipment repair	$56,000
Customer field repairs	$97,000
Incoming material audits	$80,000