Defective units, reworking of units, prevention cost , appraisal cost given difference of profit earned to find number of defective units.
Variance Corporation is a manufacturer of a versatile statistical calculator. The following information is a summary of defective and returned units for the previous year.
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Total defective units
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1,000
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Number of units reworked
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750
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Number of customer units returned
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150
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Profit for a good unit
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$40
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Profit for a defective unit
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$25
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Cost to rework a defective unit
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$10
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Cost of a returned unit
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$15
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Total prevention cost
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$10,000
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Total appraisal cost
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$5,000
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