90.2K

Verified Solution

Link Copied!

Garvey, Inc., produces cell phone equipment. Janet Mayfield, Garvey's president, implemented a quality-improvement program that has now been in operation for 2 years. The cost report shown here has recently been issued. .... Requirement 1. For each period, calculate the ratio of each COQ category to revenues and to total quality costs. Begin by calculating the ratio of each COQ category to revenues and to total quality costs for 6/30/2016, then 12/31/2016. (Round your answers to the nearest whole percentage. Total quality costs as a percentage of revenues may not match the sum of each category's percentage due to rounding.) 6/30/2016 (in thousands) % of % of total Actual revenues quality costs Prevention costs Machine maintenance $ 420 Supplier training 15 80 Design reviews 515 Total prevention costs % Appraisal costs Incoming inspections 103 328 Final testing 431 Total appraisal costs % % Internal failure costs Rework 226 122 Scrap 348 Total internal failure costs % % 163 External failure costs Warranty repairs Customer returns Total external failure costs 601 764 % % $ 2,058 % Total quality costs Total revenues $ 8,250 Requirements 1. For each period, calculate the ratio of each COQ category to revenues and to total quality costs. 2. Based on the results of requirement 1, would you conclude that Garvey's quality program has been successful? Prepare a short report to present your case. 3. Based on the 2015 survey, Janet Mayfield believed that Garvey had to improve product quality. In making her case to Garvey management, how might Mayfield have estimated the opportunity cost of not implementing the quality-improvement program? Print Done Data table Semi-Annual COQ Report, Garvey, Inc. (in thousands) 6/30/2016 12/31/2016 6/30/2017 12/31/2017 Prevention costs Machine maintenance 420 $ 420 $ 380 $ 270 Supplier training 15 108 54 44 80 219 212 198 Design reviews 515 747 646 512 Total prevention costs Appraisal costs Incoming inspections 103 129 92 59 Final testing 328 291 199 Total appraisal costs 431 457 258 Internal failure costs Rework 226 206 173 109 122 114 73 57 Scrap Total internal failure costs 348 320 246 166 328 383 163 601 89 529 76 265 62 186 External failure costs Warranty repairs Customer returns Total external failure costs Total quality costs Total revenues 764 618 341 248 $ 2,058 $ 2,142 $ 1,616 S 1,184 $ 8,250 $ 9,070 $ 9,380 $ 9,040 Print Done

Answer & Explanation Solved by verified expert

See Answer