Minturn Enterprises, Inc., operates as three autonomous companies, each with a chief executive officer who oversees its operations. At a recent corporate meeting, the company CEOs agreed to adopt total quality management and to track, record, and analyze their costs and nonfinancial measures of quality. All three companies are operating in highly competitive markets. Sales and quality-related data for September follow.

Required
1. Prepare an analysis of the costs of quality for the three companies. Categorize the costs as (a) costs of conformance, with subsets of prevention costs and appraisal costs, or (b) costs of nonconformance, with subsets of internal failure costs and external failure costs. Compute the total costs in each category for each company.
2. For each company, compute the percentage of sales represented by prevention costs, appraisal costs, total costs of conformance, internal failure costs, external failure costs, total costs of nonconformance, and total costs of quality.
3. Interpret the cost-of-quality data for each company. Is its product of high or low quality? Why? Is each company headed in the right direction to be competitive?
4. Manager Insight: Evaluate the nonfinancial measures of quality in terms of customer satisfaction. Are the results consistent with your analysis in 3? Explain youranswer.

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Carbondale Company Silverthorne Wolcott Company Company Annual sales Costs of quality $1600,000 $13,300,000 10,800,000 Vendor audits Quality audits Failure analysis Design review of products Scrap and rework Quality-certified suppliers Preventive maintenance Warranty adjustments Product recalls Quality training of $ 69,000 184,800 115,550 92,400 176,700 160,800 105,600 158,400 105,600 198,000 58,900 188,500 80,500 207,000 49,200 92,000 149,550 201,250 30,800 141,700 16,350 218,000 21,200 231,600 163,500 49,050 80,050 employees End-of-process 149,500 237,600 272,500 sampling and testing Reinspection of rework 34,500 126,500 212,750 145,200 66,000 72,600 202,700 27,250 16,350 Returned goods Customer complaint 162,450 38,150 processing Total costs of quality 109,250 Nonfinancial measures of quality S 1,728,400 981,7001,609,200 Number of warranty claims Customer complaints Defective parts per 61 107 36 52 12 million Returned orders 4,610 9.20% 2,190 4.10% 1,012 0.90%