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Abernathy, Inc., produces two different generators and is concerned about their quality. The company has identified...

Abernathy, Inc., produces two different generators and is concerned about their quality. The company has identified the following quality activities and costs associated with the two products: Generator A Generator B Units produced 166,900 347,500 Warranty work (units) 1,730 840 Scrapped units (number) 3,460 860 Inspection (hours) 3,370 1,700 Quality training (hours) 88 88 Activities: Performing warranty work $824,970 Scrapping units 622,080 Inspecting 288,990 Quality training 87,472

1. Calculate the quality cost per unit for each product, and break this unit cost into quality cost categories. If required, round your answers to the nearest cent. Generator A Generator B Unit cost $ $ Which of the two seems to have the lowest quality?

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Answer #1
Generator A Generator B
Waranty work $555,330 $269,640
Scrapped units $498,240 $123,840
Inspection $192,090 $96,900
Quality training $43,736 $43,736
Total cost $1,289,396 $534,116
Units produced 166,900 347,500
Unit Cost $7.73 $1.54
Lowest quality Generator B
Generator A Generator B
Waranty work =824970*1730/(1730+840) =824970*840/(1730+840)
Scrapped units =622080*3460/(3460+860) =622080*860/(3460+860)
Inspection =288990*3370/(3370+1700) =288990*1700/(3370+1700)
Quality training =87472*88/(88+88) =87472*88/(88+88)
Total cost =SUM(F4:F7) =SUM(G4:G7)
Units produced 166900 347500
Unit Cost =F8/F9 =G8/G9
Lowest quality Generator B
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