Question

Free Manufacturing Company (FMC) is based in San Diego California. FMC wants to determine the cost of quality for the products manufactured.
Using the provided data, complete the Cost of Quality (COQ) Report by answering the following question
	Costs Allocation Rate		Quantity of Costs Allocation Base
Customer Support	60	per hour	10,000	hours
Design Engineering	100	per hour	5,000	hours
Inspection (manufacturing)	50	per hour	40,000	hours
Process Engineering	80	per hour	6,000	hours
Rework	100	per hour	10,000	hours
Transportation	300	per hour	4,000	loads
Warranty Repair	100	per hour	10,000	hours
Revenue	50,000,000
Required:
1). Categorize the costs into: Prevention, Appraisal, Internal Failure, and External Failure Costs
2). Compute the total costs for each category. Round answers to four decimal points.
3). Compute the percentage of revenue for each category. Round answers to four decimal points.
4). Compute the Total Costs of Quality. Round answers to four decimal points.

Answer 1

	Preventive	Appraisal	Internal Failure	External Failure
Customer Support	600000
Design Engineering	500000
Inspection		2000000
Process Engineering	480000
Rework			1000000
Transportation			1200000
Warranty Repair				1000000
	1580000	2000000	2200000	1000000
Revenue	50000000	50000000	50000000	50000000
%	3.16%	4.00%	4.40%	2.00%

Total Cost of Quality
Customer Support	600000
Design Engineering	500000
Inspection	2000000
Process Engineering	480000
Rework	1000000
Transportation	1200000
Warranty Repair	1000000
	6780000