Internal reports on quality at the Acme Publishing Company generated the following information for the Trade Division for the first three months of the year:
$ \begin{array}{ll}
\text{Total sales}&\$ 1,000,000\
\text{Costs of quality:}&\
\text { Prevention } & 50,000 \
\text { Appraisal } & 47,000 \
\text { Internal failure } & 36,000 \
\text { External failure } & 64,000
\end{array} $
Compute the ratio of costs of nonconformance to total costs of quality.

Question

Internal reports on quality at the Acme Publishing Company generated the following information for the Trade Division for the first three months of the year:
 $ \begin{array}{ll}
\text{Total sales}&\$ 1,000,000\
\text{Costs of quality:}&\
\text { Prevention } & 50,000 \ 
\text { Appraisal } & 47,000 \ 
\text { Internal failure } & 36,000 \ 
\text { External failure } & 64,000
\end{array} $ 
Compute the ratio of costs of nonconformance to total costs of quality.

Quizplus · Accepted Answer

Costs of nonconformance include both internal and external failure costs, which total $36,000 + 64,000 = 100,000$. The total costs of quality are the sum of prevention, appraisal, and failure costs, which total $50,000 + 47,000 + 36,000 + 64,000 = 197,000$. The ratio of costs of nonconformance to total costs of quality is $100,000 / 197,000 = 0.5076$, or 50.8%.

Internal Reports on Quality at the Acme Publishing Company Generated