Prep E4-29A 29A Prepare a Costs of Quality report (Learning Objective 5) Goodchill Industries manufactures freezers. Here is some information about its "LX17" line of freezers over the past year: Number of units manufactured and sold ....... Selling price per unit ...... Variable manufacturing and selling costs per unit. Hours spent by engineers improving design ..... Testing and inspection hours per unit ............ Percentage of units reworked in the plant after inspection ................... Average variable rework costs per freezer ...... Percentage of units repaired under warranty at customers' homes....... Average variable repair costs at customers' homes per freezer ........... Estimated lost sales due to quality reputation ......... Design engineer's labor rate (includes benefits and payroll taxes) ......... Inspection costs per hour ................. 5,000 units $1,500 $800 1,000 0.5 hours 10% $400 8% $450 300 units $75 per hour $40 per hour Requirements 1. Prepare a Cost of Quality (COQ) report. In addition to calculating the total costs of each category, calculate the percentage of each COQ category of the total COQ. 2. Why would the variable repair cost at the customers' home generally be higher than the "in factory" rework cost? 3. How can use of the COQ report lead to improvements in the production process or in the quality of the product itself