1. The Colonial Home Furniture Company manufactures two-drawer oak file cabinets that are sold unassembled through catalogs. The company initiates production of 150 cabinets per week. The percentage of good-quality cabinets averages 83% per week. The percentage of poor-quality cabinets that can be reworked is 60%. The direct manufacturing cost of cabinets is $27.00 and the rework cost is $8.00.
a. What is the weekly product yield of filing cabinets?
b. If the company desires a product yield of 145 cabinets per week what is the necessary percentage of good quality items?
c. What is the manufacturing cost per cabinet has given the original percent good quality of 83%?
d. Compute the quality-productivity ratio (QPR). e. Compute the QPR if the percent good quality is increased to 90% good quality
2. Calista’s Doggie Divas, Inc. produces expensive doggie tents (so you can take your best friend camping). The company implemented a total quality management program in 2010. Following are quality related accounting data that have been accumulated for 2010 and 2012. Compute quality sales indices and quality-manufacturing cost indices for each year. Is it possible to assess the effectiveness of the company’s quality-management program from these index values?
Quality Costs (000s)
Year 2010 2012
Prevention 2.0 25.0
Appraisal 24.0 31.0
Internal Failure 40. 48.0
External Failure 110.0 102.0 2
Accounting Measures (000s)
Sales 2700.0 2705.0
Manufacturing Cost 421.0 425.0