Burrow Corp.’s quality report for October 2010 showed the following information:
|
Profit for a good unit |
$76 |
|
Profit for a defective unit |
$44 |
|
Cost to rework a defective unit |
$14 |
|
Cost to process a returned unit |
$20 |
|
Total prevention cost |
$54,000 |
|
Total appraisal cost |
$32,000 |
|
Litigation related to product failure |
$140,000 |
|
Opportunity cost of lost customers while litigation is being settled |
$100,000 |
|
Total defective units |
4,000 |
|
Number of units reworked |
2,800 |
|
Number of customer units returned |
1,300 |
Required:
Compute the following:
a. Profit lost by selling unreworked defects
b. Total rework cost
c. Cost of processing customer returns
d. Total failure cost
e. Total quality cost