Ratios of prevention and appraisal costs to failure costs

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Reference no: EM132219589

The Aggie Remanufacturing Company of College Station, Texas, has gathered the following qualityrelated

costs data:

Failure costs

Defective products $ 4,234

Engineered scrap 21,265

Nonengineered scrap 24,123

Consumer adjustments 25,654

Downgrading products 0

Lost goodwill Not evaluated

Customer policy changes Not evaluated

TOTAL

Appraisal costs

Receiving inspection $ 10,155

Line 1 inspection 9,225

Line 2 inspection 7,455

Spot checking 9,766

TOTAL

Prevention costs

Quality training $ 25,500

Process engineering

Corporate 132,678

Plant 44,124

Product redesign 10,422

TOTAL

a. Compute the ratios of prevention and appraisal costs to failure costs.

b. What would you recommend that this company do?

Reference no: EM132219589

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