StatPro Corporation StatPro Corporation is a manufacturer of a versatile statist
ID: 2531059 • Letter: S
Question
StatPro Corporation
StatPro Corporation is a manufacturer of a versatile statistical calculator. The following information is a summary of defective and returned units for the previous year.
1,000
750
150
$40
$25
$10
$15
$10,000
$5,000
a. The total rework cost is:
$7,500.
$15,000.
$2,500.
$3,750.
b. The cost of processing customer returns is
$9,000.
$2,500.
$22,500.
$2,250.
c. The total failure cost is
$15,000.
$13,500.
$11,250.
$8,250.
1,000
Number of units reworked750
Number of customer units returned150
Profit for a good unit$40
Profit for a defective unit$25
Cost to rework a defective unit$10
Cost of a returned unit$15
Total prevention cost$10,000
Total appraisal cost$5,000
a. The total rework cost is:
$7,500.
$15,000.
$2,500.
$3,750.
b. The cost of processing customer returns is
$9,000.
$2,500.
$22,500.
$2,250.
c. The total failure cost is
$15,000.
$13,500.
$11,250.
$8,250.
Explanation / Answer
a. The total rework cost is = $7,500
Rework Cost = 750 units reworked x $10/unit rework cost = $7,500
b. The cost of processing customer returns = $2,250
Cost of processing customer returns = 150 returned units x $15/unit = $2,250
c. The total failure cost = $13,500
750 units reworked x $10/unit $ 7,500
150 units returned x $15/unit 2,250
250 units not reworked x $15/unit 3,750
Total $13,500
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