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- What Will Be the Total External Failure Cost Appearing

question 136

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 Thais Company’s quality cost report is to be based on the following data:  Liability arising from defective products $65,000 Lost sales due to poor quality $61,000 Test and inspection of in-process goods $57,000 Quality circles $27,000 Net cost of spoilage $103,000 Debugging software errors $39,000 Rework labour and overhead $105,000 Final product testing and inspection $42,000 Statistical process control activities $71,000\begin{array}{l}\text { Thais Company's quality cost report is to be based on the following data: }\\\begin{array} { | l | r | } \hline \text { Liability arising from defective products } & \$ 65,000 \\\hline \text { Lost sales due to poor quality } & \$ 61,000 \\\hline \text { Test and inspection of in-process goods } & \$ 57,000 \\\hline \text { Quality circles } & \$ 27,000 \\\hline \text { Net cost of spoilage } & \$ 103,000 \\\hline \text { Debugging software errors } & \$ 39,000 \\\hline \text { Rework labour and overhead } & \$ 105,000 \\\hline \text { Final product testing and inspection } & \$ 42,000 \\\hline \text { Statistical process control activities } & \$ 71,000 \\\hline\end{array}\end{array}
- What will be the total external failure cost appearing on the quality cost report?

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Definitions:

Long-Run Equilibrium

A state in which all firms in an industry are producing at their minimum long-run average cost, and the market supply equals market demand.

Profit-Maximizing Quantity

The level of production at which a company can achieve the highest possible profit.

Panel

A group of people selected to discuss, investigate, or decide on matters pertaining to a particular subject or to give expert advice.

Intersection

The point at which two or more lines, streets, or elements meet or cross.

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