Mercury, Incorporated, produces cell phones at its plant in Texas. A year ago, a consumer survey ranked the company$$s cell phones low in product quality. Shocked by this result, Jorge Gomez, Mercury$$s president, set up a task force to implement a formal quality improvement program. Included on this task force were representatives from the Engineering, Marketing, Customer Service, Production, and Accounting departments. After working together for a year, the task force prepared the quality cost report shown below:

Mercury, Incorporated

Quality Cost Report

$($in thousands$)$

Last Year This Year

Prevention costs:

Machine maintenance $ $79$ $ $120$

Training suppliers $019$

Quality circles $029$

Total prevention cost $79168$

Appraisal costs:

Incoming inspection $2949$

Final testing $8999$

Total appraisal cost $118148$

Internal failure costs:

Rework $59139$

Scrap $4979$

Total internal failure cost $108218$

External failure costs:

Warranty repairs $9939$

Customer returns $32989$

Total external failure cost $428128$

Total quality cost $ $733$ $ $662$

Total production cost $ $4,650$ $ $5,250$

 

 

Required:

$1.$ Expand the company$$s quality cost report by showing the costs in both years as percentages of both total production cost and total quality cost.

Note: Round your percentage answers to $1$ decimal place $($i$.$e $0\mathrm{.}1234$ should be entered as $12\mathrm{.}3).$

Answer rating: 100% (QA)

To expand the quality cost report and calculate the costs as percentages of both total production cost and total quality cost we need to divide each c... View the full answer