The following represents the financial information of Fabriz Corporation, a manu
ID: 2557263 • Letter: T
Question
The following represents the financial information of Fabriz Corporation, a manufacturer of electronic components, for two months:
a. Calculate the ratio of the prevention, appraisal, internal failure, and external failure costs to sales for March and April
March April Sales 540,000 500,000 Costs: Process inspection 4,400 3,960 Scrap 3,900 4,860 Quality training 37,800 31,000 Warranty repairs 9,200 9,800 Testing equipment 16,000 16,000 Customer complaints 8,200 7,800 Rework 36,000 47,000 Preventive maintenance 30,000 20,000 Materials inspection 15,000 10,200 Field testing 19,200 25,800Explanation / Answer
March April Sales [A] $ 540,000 $ 500,000 Prevention Cost Process inspection $ 4,400 $ 3,960 Quality Training $ 37,800 $ 31,000 Preventive Maintanance $ 30,000 $ 20,000 Material Inspection $ 15,000 $ 10,200 Total Prevention Cost [B] $ 87,200 $ 65,160 Prevention Ratio to sales [B/A*100] 16.15% 13.03% Appraisal Cost Testing Equipment $ 16,000 $ 16,000 Field Testing $ 19,200 $ 25,800 Total appraisal Cost [C] $ 35,200 $ 41,800 Appraisal Ratio to sales [C/A*100] 6.52% 8.36% Internal Failure Cost Scrap $ 3,900 $ 4,860 Rework $ 36,000 $ 47,000 Total Internal Failure Cost [D] $ 39,900 $ 51,860 Internal Failure ratio to sales [D/A*100] 7.39% 10.37% External Failure Cost Warrnaty Repairs $ 9,200 $ 9,800 Custoer Complaints $ 8,200 $ 7,800 Total External Failure Cost [E] $ 17,400 $ 17,600 External Failure ratio to Sales [E/A*100] 3.22% 3.52%
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