Exercise 11-20
Quality Costs
Tiffany Lamp Company produces stained-glass lamps that are appropriate for home and office use. The company expects sales to total approximately $50 million for the current year. Tiffany's management team has become increasingly concerned about a perception among some customers that quality is not particularly important to the company. Consequently, management recently implemented a quality improvement program and, after several months, accumulated the following data:
Required:
A. What are the total prevention costs?
B. What are the total appraisal costs?
C. What are the total internal failure costs?
D. What are the total external failure costs?
E. On the basis of your calculations, is there a reason for the perception that quality is not important to Tiffany Lamp Company?
What is that reason?
The input in the box below will not be graded, but may be reviewed and considered by your instructor.