Problem:
1. In 19x9, Allison Foods Company instituted a quality improvement program. At the end of 19x9, the management of the corporation requested a report to show the amount saved by the measures taken during the year. The actual sales and (actual quality costs for 19x8 and 19x9 were:
| |
19x8
|
19x9
|
|
Sales
|
$500,000
|
$600,000
|
|
Scrap
|
15,000
|
15,000
|
|
Rework
|
20,000
|
10,000
|
|
Training program
|
5,000
|
6,000
|
|
Consumer complaints
|
10,000
|
5,000
|
|
Lost sales, incorrect labeling
|
8,000
|
----
|
|
Test labor
|
12,000
|
8,000
|
|
Inspection labor
|
25,000
|
24,000
|
|
Supplier evaluation
|
15,000
|
13,000
|
Prepare the one-year trend report that corporate management requested. How much did profits increase because of quality improvements made in 19x9 (assuming that all reductions in quality costs are attributable to quality improvements)?