Salmon Corporation has five divisions, each manufacturing a product line that competes in the global
Salmon Corporation has five divisions, each manufacturing a product line that competes in the global marketplace. The company is planning to compete for the Malcolm Baldridge Award, so management requires that each division record and report its efforts to achieve quality in its product line. The Information below was submitted to the companyAc€?cs controller for the recent six-month period.
A
B
C
D
E
F
Division A
Division B
Division C
Division D
Division E
Total Revenue
$886,000
$1,040,000
$956,000
$1,225,000
$1,540,000
Costs of Quality
Consumer Complaint Processing
$10,400
$12,600
$12,300
$10,100
$15,600
Scrap and Rework
26,800
13,500
38,700
11,900
34,800
Quality Audit of Products
13,600
28,400
6,300
25,600
11,700
Returned Goods
18,700
11,400
38,400
11,300
36,000
Warranty Claims
21,100
6,400
36,200
6,500
42,600
Quality Training of Employees
8,900
12,600
4,600
11,400
4,200
Preventative Maintenance
11,300
18,700
8,300
13,600
6,300
Failure Analysis
34,800
9,800
46,900
10,200
56,900
Inspection of Materials
12,500
18,700
7,800
17,500
5,600
Nonfinancial Measures of Quality
Number of Warranty Claims versus
22
12
46
12
62
Number of Sales
6,500
8,900
7,200
9,800
9,600
Number of Products Reworked versus
150
140
870
70
900
Number of Products Manufactured
325,000
456,000
365,000
450,000
315,000
REQUIRED
Prepare an analysis of the costs of quality for each division. Categorize the costs as costs of conformance or costs of nonconformance. (Round to two decimal places)
For each division, compute the percentage of total revenue for each of the four cost-of-quality categories and the ratios for the nonfinancial data. (Round percentage to two decimal places)
Rank the divisions in order of their apparent product quality.
What three measures were most important in your rankings in requirement 3.
Which division has been most successful in its bid to improve quality? What measures illustrate its high quality rating?
Consider the divisions producing the lowest-quality products. What actions would you recommend to the management of each division? Where should their quality dollars be spent?