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The management of Boogie Company thinks that its total costs of quality can be reduced by increasing expenditures in certain key costs of quality categories. The following costs of quality have been identified by management: Cost of Quality Costs Rework P 6,000 15,000 9,000 12,000 12,000 5,000 Recalls Reengineering efforts Repair Replacements Retesting

The management of Boogie Company thinks that its total costs of quality can be reduced by increasing expenditures in certain key costs of quality categories. The following costs of quality have been identified by management: Cost of Quality Costs Rework P 6,000 15,000 9,000 12,000 12,000 5,000 Recalls Reengineering efforts Repair Replacements Retesting

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Exercise 3 (Cost of Quality Category) The management of Boogie Company thinks that its total costs of quality can be reduced by increasing expenditures in certain key costs of quality categories. The following costs of quality have been identified by management: Cost of Quality Costs Rework P 6,000 15,000 9,000 12,000 12,000 5,000 18,000 9,000 15,000 7,000 18,000 10,000 9,000 5,000 1,000 15,000 Recalls Reengineering efforts Repair Replacements Retesting Supervision Scrap Training Testing of incoming materials Inspection of work in process Downtime Product liability insurance Quality audits Continuous improvement Warranty repairs Required: 1. Classify these costs into the four costs of quality categories. 2. Determine the total pesos being spent on each of the categories. 3. Based on the company's expenditures by cost of quality categories, on which cost category should the company concentrate its efforts to decrease its overall costs of quality?
Transcribed Image Text:Exercise 3 (Cost of Quality Category) The management of Boogie Company thinks that its total costs of quality can be reduced by increasing expenditures in certain key costs of quality categories. The following costs of quality have been identified by management: Cost of Quality Costs Rework P 6,000 15,000 9,000 12,000 12,000 5,000 18,000 9,000 15,000 7,000 18,000 10,000 9,000 5,000 1,000 15,000 Recalls Reengineering efforts Repair Replacements Retesting Supervision Scrap Training Testing of incoming materials Inspection of work in process Downtime Product liability insurance Quality audits Continuous improvement Warranty repairs Required: 1. Classify these costs into the four costs of quality categories. 2. Determine the total pesos being spent on each of the categories. 3. Based on the company's expenditures by cost of quality categories, on which cost category should the company concentrate its efforts to decrease its overall costs of quality?
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