Problem:
1. The following information pertains to Omni, Inc., for 19x8:
|
Sales
|
$30,000,000
|
|
External failure costs
|
900,000
|
|
Internal failure costs
|
1,800,000
|
|
Prevention costs
|
400,000
|
|
Appraisal costs
|
600,000
|
1. Calculate each category of quality costs as a percentage of sales.
2. Calculate total quality costs as a percentage of sales.
3. If quality costs were reduced to 2.5 percent of sales, determine the increase in profit that would result.