Exhibit 8–6 May 20x2 Quality Costs Percent of Total Quality-Cost Report: FitDat.com Prevention costs fit:dat Quality training. $ 200 1.3 Reliability engineering. 1,000 6.5 Pilot studies. 500 3.3 Systems development. 800 5.2 Total prevention costs. $ 2,500 16.3 Appraisal costs Materials inspection $ 600 3.9 Supplies inspection 300 2.0 Reliability testing. Testing laboratory.. 500 3.3 2,500 16.3 Total appraisal costs $ 3,900 25.5 Internal failure costs Scrap. $ 1,500 9.8 Repair. 1,800 11.8 Rework. 1,200 7.8 Downtime. 600 3.9 Total internal failure costs. $ 5,100 33.3 External failure costs Warranty costs $ 1,400 9.2 Out-of-warranty repairs and replacement. 600 3.9 Customer complaints.. Product liability 300 2.0 1,000 6.5 Transportation losses 500 3.3 Total external failure costs $ 3,800 24.9 Total quality costs $15,300 100.00
San Mateo Circuitry manufactures electrical instruments for a variety of purposes. The following costs related to maintaining product quality were incurred in May.
Training of quality-control inspectors .................................................. $21,000
Tests of instruments before sale ............................................................... 30,000
Inspection of electrical components purchased from outside suppliers ........................................................... .................................................................12,000
Costs of rework on faulty instruments ................................................ 9,000
Replacement of instruments already sold, which were still covered by warranty ............................................ .............................................................16,500
Costs of defective parts that cannot be salvaged ........................... 6,100
Required: Prepare a quality-cost report similar to the report shown in Exhibit 8–6.
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