Florex Company

Quality Cost Report

Last Year This Year
Amounts (in Percent of Amounts (in
thousand) Sales thousand)
Prevention costs:
Quality engineering 300 0.40% 675
Statistical process control 0 0.00% 375
Systems development 900 1.20% 750
Total prevention costs 1,200 1.60% 1,800
Appraisal costs:
Inspection 630 0.84% 1,080
Depreciation of test equipment 345 0.46% 225
Supplies usied in testing 60 0.08% 45
Product testing 840 1.12% 1,350
Total appraisal costs 1,875 2.50% 2,700
Internal failure costs:
Reword labor 1,200 1.60% 1,680
Net cost of scrap 600 0.80% 1,140
Disposal of defective products 780 1.04% 1,050
Total internal failure costs 2,580 3.44% 3,870
External failure costs:
Cost of field servicing 1,425 1.90% 900
Warranty repairs 3,300 4.40% 1,050
Product recalls 2,325 3.10% 750
Total external failure costs 7,050 9.40% 2,700
Total quality cost 12,705 16.94% 11,070
This Year
Percent of
Sales

0.90%
0.50%
1.00%
2.40%

1.44%
0.30%
0.06%
1.80%
3.60%

2.24%
1.52%
1.40%
5.16%

1.20%
1.40%
1.00%
3.60%
14.76%