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Defective units, reworking of units, prevention cost , appraisal cost given difference of profit earned to find number of defective units.
Variance Corporation is a manufacturer of a versatile statistical calculator. The following information is a summary of defective and returned units for the previous year.
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
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