(Cost of quality) Mathes Company wants to determine its cost of quality. The company has gathered the following information from records pertaining to August 2000
|
Defective units |
2,500 |
|
Units reworked |
600 |
|
Defective units returned |
200 |
|
Appraisal costs |
$6,800 |
|
Cost per unit for rework |
$6 |
|
Prevention costs |
$25,000 |
|
Profit per good unit produced and sold |
$30 |
|
Profit per defective unit sold |
$20 |
|
Cost per unit for customer returns |
$5 |
|
Cost of warranty work |
$2,500 |
Compute the following:
a. Lost profits from selling defective work
b. Total costs of failure
c. Total quality cost