StatPro Corporation is a manufacturer of a versatile statistical calculator. The

Question

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 quality cost is:

$15,000.

15,750

28,500

11,250

b. he profit lost by selling defective units to Pittman Company totals $1,440. The total rework cost for 700 units is $28,000. The difference between the profit earned on a good unit and a defective unit is $12. How many total defective units did StatPro Corporation produce?

120

740

736

820

c. The profit lost by selling defective units not reworked is

25,000

15,000

18,750

3,750

Total defective units

1,000

Number of units reworked

750

Number of customer units returned

150

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

Explanation / Answer

SOLUTION

(A) Total quality cost = $28,500

(B) Total defective units StatPro Corporation produced = 820 units

(C) The profit lost by selling defective units not reworked is - $3,750

250 units not reworked * $15 = $3,750

Amount ($) Amount ($) Failure cost-   750 units reworked * $10/unit 7,500   150 units returned * $15/unit 2,250   250 units not reworked * $15/unit 3,750 Total failure costs 13,500 Total prevention costs 10,000 Total appraisal costs 5,000 Total quality costs 28,500

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