Total Cost of Quality. The Duquesne Motor Company makes and sells 95,000 motors a year. Their...

 

  

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Total Cost of Quality. The Duquesne Motor Company makes and sells 95,000 motors a year. Their average cost per unit is Material - $2,000 Labor - $7,000 Total Production Cost $9,000 The units sell for $18,000 each Inspection of each unit costs $125 Testing is $200 per unit Average rework and repair per unit during the year is $95 Average scrappage of units is $75 Quality training costs $5,000 per month Warranty cost averages 3% of revenue (warranty is usually based on selling price not cost - total revenue) Returns average 2% of revenue (returns are also based on selling price - total revenue) What is the Total COQ for the Duquesne Motor Company for one year? What are (enter dollar signs where appropriate) 1. Appraisal costs (total of inspection and testing) 2. Internal failure costs (total of scrap, rework, repair) 3. Prevention costs (quality training - each month times 12 months)) 4. External failure costs (total of warranty and returns) 5. Total Cost of Quality (sum of the above four items) 6. What is the Total COQ as a percent of sales (Total COQ/ Total Revenue) Total Cost of Quality. The Duquesne Motor Company makes and sells 95,000 motors a year. Their average cost per unit is Material - $2,000 Labor - $7,000 Total Production Cost $9,000 The units sell for $18,000 each Inspection of each unit costs $125 Testing is $200 per unit Average rework and repair per unit during the year is $95 Average scrappage of units is $75 Quality training costs $5,000 per month Warranty cost averages 3% of revenue (warranty is usually based on selling price not cost - total revenue) Returns average 2% of revenue (returns are also based on selling price - total revenue) What is the Total COQ for the Duquesne Motor Company for one year? What are (enter dollar signs where appropriate) 1. Appraisal costs (total of inspection and testing) 2. Internal failure costs (total of scrap, rework, repair) 3. Prevention costs (quality training - each month times 12 months)) 4. External failure costs (total of warranty and returns) 5. Total Cost of Quality (sum of the above four items) 6. What is the Total COQ as a percent of sales (Total COQ/ Total Revenue)

Answer rating: 100% (QA)

To calculate the Total Cost of Quality COQ for the Duquesne Motor Company for one year we can break it down into the following components 1 Appraisal ... View the full answer