In response to intense foreign competition, Florex Company has taken steps to improve the quality...
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Accounting
In response to intense foreign competition, Florex Company has taken steps to improve the quality of its products. A summary of its quality costs (in thousands) over the past two years is given below:
Costs (in thousands)
Last Year
This Year
Inspection
$ 750
$ 795
Quality engineering
$ 600
$ 675
Depreciation of test equipment
$ 225
$ 150
Rework labor
$ 1,500
$ 1,680
Statistical process control
$ 0
$ 300
Cost of field servicing
$ 1,050
$ 900
Supplies used in testing
$ 45
$ 30
Systems development
$ 660
$ 750
Warranty repairs
$ 3,600
$ 1,275
Net cost of scrap
$ 690
$ 1,515
Product testing
$ 1,080
$ 1,425
Product recalls
$ 2,100
$ 825
Disposal of production defects
$ 810
$ 1,305
Sales have been flat over the past few years, at $75,000,000 per year.
Required:
1. Prepare a quality cost report for this year and last year.
Note: Enter amount values in thousands. Round your percentage answers to 2 decimal places (i.e 0.1234 should be entered as 12.34).
Answer & Explanation
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