Cost of quality data are often expressed as indexes by dividing by some reference value, such as cost/sales dollar or cost/labor dollar. Compute a sales dollar base index for International Fabrica, Inc., to analyze the quality cost data in worksheet Prob.03-08 in the Excel workbook Ch03Data.xlsx on the Student Companion website and prepare a memo to management.

 

International Fabrica, Inc.
		International Fabrica
TOTAL SALES AND QUARTERLY QUALITY COSTS ($Thousands)
	1	2	3	4
Total sales	3,708.0	3,785.4	4,008.6	3,695.4
External failure	252.72	187.38	128.52	115.74
Internal failure	421.38	335.16	255.96	149.76
Appraisal	174.78	204.93	246.96	239.58
Prevention	25.56	26.28	45.18	72.18
Total Quality Cost	874.44	753.75	676.62	577.26
	INDEX OF QUALITY COSTS AS % OF SALES
	1 Qtr.	2 Qtr.	3 Qtr.	4 Qtr.
External failure	6.82	4.95	3.21	3.13
Internal failure	11.36	8.85	6.39	4.05
Appraisal	4.71	5.41	6.16	6.48
Prevention	0.69	0.69	1.13	1.95
Total Quality Cost	23.58	19.91	16.88	15.62
% Total Sales/Base	100.00	102.09	108.11	99.66