Question

The Duquesne Motor Company makes and sells 95,000 motors a year. Their average cost per unit is

Material - $2,000
Labor - $7,000
Total Production Cost $9,000
The units sell for $18,000 each
Inspection of each unit costs $125
Testing is $200 per unit
Average rework and repair per unit during the year is $95
Average scrappage of units is $75
Quality training costs $5,000 per month
Warranty cost averages 3% of revenue (warranty is usually based on selling price not cost - total revenue)
Returns average 2% of revenue (returns are also based on selling price - total revenue) What is the Total COQ for the Duquesne Motor Company for one year?

What are:
Appraisal costs (total of inspection and testing)

Answer 1

To calculate the Total Cost of Quality (COQ) for the Duquesne Motor Company, we need to consider the different components. The appraisal costs include the inspection and testing costs. The inspection cost per unit is $125, and the testing cost per unit is $200.

Step-by-step explanation:

To calculate the Total Cost of Quality (COQ) for the Duquesne Motor Company, we need to consider the different components. The appraisal costs include the inspection and testing costs. The inspection cost per unit is $125, and the testing cost per unit is $200. Therefore, the total appraisal cost per unit is $325. Multiplying this by the number of units (95,000), we find that the total appraisal costs for the company for one year is $30,875,000.

Appraisal costs: $30,875,000

It is important to note that appraisal costs are a part of the Total Cost of Quality, which includes the costs associated with preventing, detecting, and correcting defects or non-conformities.