(Cost of quality) Managers at Schubert Corp. want to determine the company’s cost of quality. The following information has been gathered from the records for August 2010:
|
Defective units |
6,000 |
|
Units reworked |
1,200 |
|
Defective units returned |
400 |
|
Appraisal costs |
$13,600 |
|
Cost per unit for rework |
$20 |
|
Prevention costs |
$85,000 |
|
Profit per good unit produced and sold |
$75 |
|
Profit per defective unit sold |
$45 |
|
Cost per unit for customer returns |
$15 |
|
Cost of warranty work |
$9,000 |
Compute the following:
a. Lost profits from selling defective work
b. Total costs of failure
c. Total quality cost