Problem:
Lager Corp. produces and supplies automotive manufactures with the mechanisms used to adjust the positions of front seating units. Several competitors have recently entered the market, and management is concerned that the quality of the company's current products may be surpassed by the quality of the new competitors' products. The controller was asked to conduct an analysis of the efforts in January to improve product quality. His analysis generated the following costs of quality:
Training of employees $22,400
Customer services 13,600
Reinspection of rework 28,000
Quality audits 31,300
Design review 27,500
Warranty claims 67,100
Sample testing of materials 27,400
Returned goods 98,700
Preventative maintenances 26,500
Quality engineering 18,700
Setup for testing new products 42,100
Scrap and rework 76,500
Losses caused by vendor scrap 65,800
Product simulation 28,400
1. Prepare a detailed analysis of the costs of quality
2. Comment on the company's current efforts to improve product quality.