Stainless Company operates as three autonomous divisions. Each division has a general manager in charge of product development, production, and distribution. Management recently adopted total quality management, and the divisions now track, record, and analyze their costs and nonfinancial measures of quality. All three divisions are operating in highly competitive marketplaces. Sales and quality-related data for April follow.

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

North Division 8,500,000 West Division 9,500,000 South Division Annual sales Costs of quality: Field testing Quality audits Failure analysis Quality training of employees Scrap and rework Quality-certified suppliers Preventive maintenance Warranty claims Customer complaint processing Process engineering End-of-process sampling and testing Scrap disposal losses Returned goods Product recalls Total costs of quality 51,600112,800 183,950 109,650 92,700 67,700 154,800 108,200 141,900 106,050 54,800 232,200 41,900 64,500 45,150 64,500 1,768,000 7,200 03,100 60,200 151,000 34,400 65,800 07,500 51,500 79,100 14,700 18,800 94,000 148,000 42, il p 108,100 24,700 77,400 152,500 23,500 16,200 32,900 1,292,000 $1,156,000 Nonfinancial measures of quality: Defective parts per million Returned orders Customer complaints Number of warranty claims 3,410 7.40% 62 74 1,104 1.10% 12 16 1,940 3.20% 30 52