Reference no: EM132580475

The Nothern distrubtion started to analyse the quality costs for the last three years. In start the Qulaity Cost audit report was prepared for the last three years . year 1 ( year 0) and after two years ( Year 2) data is given as following in connection to different quality costs.

Factors	Year 0 (5)	Year 2 151
Sales	6,000000	9,000,000
Turning	20.000	90.000
Quality Palnning	20.000	86.000
Other Qulaity Improvement	40.000	60.000
Supplier Evaulation	30.000	40.000
Testing	100.000	120.000
Quality performance Measurement	10.000	60.000
Supplier Nfonitring	60.000	40.000
Customer SUrryCS	10.000	30.000
Rework & Reject Reinspection & testing	150,000 30,000	55.000 35,000
Equipment Failure	50.000	30,000
Downtime	50,000	20,000
Product Liabaility Insurance	250.000	70.000
Warrenty Repairs	120.000	100.000
Customer Lesses (Estimated)	1400.000	600.000

Required

Question 1. Classify the cost as Appraisal, Preventive, Internal & external failure.

Question 2. Compute quality cost as a percentage of sales for each of the duration . By how much has profit increased because of quality improvements?

Question 3. Assuming that quality costs can be reduced by 7.2 % of year 2 quality cost furher at year 5 , how much additional profit is available through quality improvements (assume that sales revenues will remain the same)?

Question 4. Prepare a quality cost report for year 2 .