In response to intensive foreign competition, the management of Florex Company has attempted over the past year to improve the quality of its products. A statistical process control system has been installed and other steps have been taken to decrease the amount of warranty and other field costs, which have been trending upward over the past several years. Costs relating to quality and quality control over the last two years are given below:

Costs $($in thousands$)$

Last Year This Year

Inspection $ $840$ $ $870$

Quality engineering $ $360$ $ $600$

Depreciation of test equipment $ $510$ $ $300$

Rework labor $ $1,230$ $ $1,890$

Statistical process control $ $0$ $ $300$

Cost of field servicing $ $1,650$ $ $900$

Supplies used in testing $ $60$ $ $30$

Systems development $ $660$ $ $750$

Warranty repairs $ $3,000$ $ $1,200$

Net cost of scrap $ $660$ $ $1,230$

Product testing $ $990$ $ $1,350$

Product recalls $ $2,400$ $ $750$

Disposal of defective products $ $810$ $ $930$

Sales have been flat over the past few years, at $$75,000,000$ per year. A great deal of money has been spent in the effort to upgrade quality, and management is anxious to see whether or not the effort has been effective.

Required:

$1.$ Prepare a quality cost report that contains data for both this year and last year. $($Enter amount values in thousands. Round your percentage answers to $2$ decimal places $($i$.$e $0\mathrm{.}1234$ should be entered as $12\mathrm{.}34).)$

Answer rating: 100% (QA)

Here is the quality cost report for Florex Company Quality Cost Report Costs in thousandsLast YearTh... View the full answer