Paralogic Corp $\begin{array}{lccc} \text { Warranty repair costs } & \$ 200,000 \\\text { Reliability engineering } & 400,000 \\\end{array}$

question 57

Essay

Paralogic Corp. produces two microchips that are popular in the with laptop computer manufacturers: Model A and Model $\begin{array}{lccc} \text { Warranty repair costs } & \$ 200,000 \\\text { Reliability engineering } & 400,000 \\\end{array}$

$\begin{array}{|l|r|}\hline \text { Rework at Paralogic's manufacturing plant } & 80,000 \\\hline \text { Manufacturing inspection } & 50,000 \\\hline \begin{array}{l}\text { Transportation costs to customer sites to fix } \\\text { problems }\end{array} & 25,000 \\\hline \text { Quality traming for employees } & 80,000 \\\hline\end{array}$ Quality cost reports revealed the following about Model B: $\begin{array}{lr}\text { Prevention costs } & 82.3 \% \\\text { Appraisal costs } & 4.7 \% \\\text { Internal failure costs } & 6.0 \% \\\text { External failure costs } & 7.0 \% \\\text { Total quality costs } & 100.0 \%\end{array}$ Finally, the company's accounting department reported that the percentage of sales revenues consumed by quality costs is lower for Model B than for Model A.
Required:
A. Classify the costs that relate to Model A as prevention, appraisal, internal failure, or external failure.
B. Using your answer in requirement "A," compute prevention, appraisal, internal failure, and external failure costs as a percentage of Model A's total quality costs.
C. Comment on your findings, noting whether the company is "investing" its quality expenditures differently for the two synthesizers.

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Definitions:

Aging Population

Demographic trend characterized by an increase in the proportion of elderly individuals within the population.

Research And Development

The investigative and innovative activities undertaken by businesses or organizations to develop new products or improve existing ones.

Cost of Healthcare

The total expenses associated with medical services, treatments, and procedures delivered to individuals or populations.

Consumer Demand

The desire and willingness of consumers to purchase goods or services at a given price over a certain time period.