Proprinting, Ltd is Australian owned and specializes in the digital printing. Proprinting provides online printing and run
Question:
Proprinting, Ltd is Australian owned and specializes in the digital printing. Proprinting provides online printing and run by qualified tradesmen who print the jobs to perfection. The services include Business Cards, Stickers, Posters, Brochures, Folders, Booklets, Letterhead and Newsletters, Tri-Folds, Manuals, Post Cards, Flyers, Catalogues, Envelopes. The printing facility is loaded with the latest innovations in OFFSET and Digital printing technology. The team is comprised of digital graphics specialists and experienced press operators. It's this unique combination of technology and talent that produces the brilliant results.
Ethan, the manager of the company informed that in 2019 the quality compliance costs were approximately 14% of sales. He aims to implement zero defect production process. However, Ethan also aware that it is important to reduce the non-value-added activities and protecting the brand image while improving company’s profit. Therefore, he planned a five- year quality costs management program to improve the quality performance. He sets an ambitious plan to reduce the quality cost to around 2 % of sales.
The following information provides indicators to the success of the quality costs management program.
YEAR | SALES REVENUES | QUALITY COSTS |
2020 | $2 960 000 | $348 400 |
2021 | 3 750 000 | $481 750 |
2022 | 4 420 000 | $532 490 |
2023 | 5 230 000 | $242 175 |
2024 | 6 000 000 | $117 800 |
Meanwhile, detail of the quality costs reports across the five years is provided below:
Quality cost Activity | 2020 | 2021 | 2022 | 2023 | 2024 |
Improvements in Quality process | $9,600 | $19,540 | $57,455 | $25,650 | $15,000 |
Quality training of staff to use new equipment and | $6,750 | $32,710 | $53,200 | $42,475 | $16,000 |
Pruorcehsaseinsg of equipment and updated manuals | $3,750 | $9,750 | $25,235 | $0 | $0 |
Quality reporting (move from yearly to a monthly basis) | $3,500 | $6,000 | $20,000 | $5,500 | $2,500 |
Proofreading printed materials | $43,950 | $99,950 | $88,000 | $31,850 | $12,000 |
Other inspection (paper and inks from suppliers) | $44,650 | $43,800 | $33,400 | $18,500 | $13,000 |
Correction of print errors detected prior to delivery | $29,750 | $38,750 | $33,750 | $20,000 | $10,000 |
Recalibration of equipment | $26,250 | $37,500 | $48,550 | $20,000 | $6,800 |
Production process breakdown (downtime) | $72,000 | $63,750 | $67,400 | $30,750 | $20,500 |
Rework of poor quality detected by clients after delivery | $53,560 | $61,100 | $51,975 | $26,800 | $10,500 |
Waste of materials for printing returned by clients | $54,640 | $68,900 | $53,525 | $20,650 | $11,500 |
$348,400 | $481,750 | $532,490 | $242,175 | $117,800 |
- You are a member of the management consultant team of this company. Ethan has required the team to give a feedback whether the suggested quality cost plan is in line with the company’s strategy and objective:
- Prepare a graph that shows the trend on each quality cost category over the five years of the quality costs management program, use the graph to explain your findings
Expert Answer:
Proprinting Ltd 2020 2021 2022 2023 2024 Total Quality cost Activity Improvement in Quality process ... View the full answer
