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?

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