TruHeat Company manufactures furnaces. Recent information for TruHeat is as follows: Units manufactured & sold Selling...

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TruHeat Company manufactures furnaces. Recent information for TruHeat is as follows: Units manufactured & sold Selling price per unit Variable costs per unit Percentage of units reworked Rework costs per unit Testing and inspection hours per unit Percentage of units tested and inspected Percentage of unit s repaired at customer site Customer site repair costs per unit Hours spent on design 20,000 $1,500 $ 800 5.0% $ 100 1.0 10.0% 2.0% $ 400 750 The labor rate for design is $80 per hour and the rate for testing and inspection is $50 per hour. a. Calculate the costs of quality for the TruHeat furnace, classifying the costs as prevention, appraisal, internal failure and external failure. b. Based on your analysis above, what are the strategic implications of TruHeat's cost of quality results? TruHeat Company manufactures furnaces. Recent information for TruHeat is as follows: Units manufactured & sold Selling price per unit Variable costs per unit Percentage of units reworked Rework costs per unit Testing and inspection hours per unit Percentage of units tested and inspected Percentage of unit s repaired at customer site Customer site repair costs per unit Hours spent on design 20,000 $1,500 $ 800 5.0% $ 100 1.0 10.0% 2.0% $ 400 750 The labor rate for design is $80 per hour and the rate for testing and inspection is $50 per hour. a. Calculate the costs of quality for the TruHeat furnace, classifying the costs as prevention, appraisal, internal failure and external failure. b. Based on your analysis above, what are the strategic implications of TruHeat's cost of quality results?

Answer rating: 100% (QA)

Answer a Prevention Costs Design hours 750 x 80 60000 Appraisal Costs Testing and inspection hours 1... View the full answer