Chapter 10, Problem 48E

Costs of Quality

Nuke-It-Now manufactures microwave ovens. The following represents the financial information from one of its manufacturing plants for two years:

Required

1. a.         Classify these items into prevention (P), appraisal (A), internal failure (IF), or external failure (EF) costs.
2. b.         Calculate the ratio of the prevention, appraisal, internal failure, and external failure costs to sales for year 1 and year 2.