In 19×9, Allison Foods Company instituted a quality improvement program. At the end of
19×9, the management of the corporation requested a report to show the amount saved by the
measures taken during the year. The actual sales and (actual quality costs for 19×8 and 19×9 were:
|
19×8 |
19×9 |
|
|
Sales |
$500,000 |
$600,000 |
|
Scrap |
15,000 |
15,000 |
|
Rework |
20,000 |
10,000 |
|
Training program |
5,000 |
6,000 |
|
Consumer complaints |
10,000 |
5,000 |
|
Lost sales, incorrect labeling |
8,000 |
|
|
Test labor |
12,000 |
8,000 |
|
Inspection labor |
25,000 |
24,000 |
|
Supplier evaluation |
15,000 |
13,000 |
Prepare the one year trend report that corporate management requested. How much did profits increase because of quality improvements made in 19×9 (assuming that all reductions in quality costs are attributable to quality improvements)?