20x4

Revenue ₱ 12,500,000

Cost of quality Cost Percentage of rev Cost

Prevention Costs
Design engineering 240,000 100,000
Preventive equipment maintenance 90,000 35,000
Training 120,000 45,000
Supplier evaluation 50,000 20,000
TOTAL ₱ 500,000 4.0% ₱ 200,000

Appraisal Costs
Line inspection 85,000 110,000
Product-testing equipment 50,000 50,000
Incoming materials inspection 40,000 20,000
Product-testing labor 75,000 220,000
TOTAL ₱ 250,000 2.0% ₱ 400,000

Internal Failure Costs

Scrap 200,000 250,000
Rework costs 135,000 160,000
Breakdown maintenance 40,000 90,000
TOTAL ₱ 375,000 3.0% ₱ 500,000

External Failure Costs

Cost of returned goods 145,000 60,000
Customer support 30,000 40,000
Product liability claims 100,000 200,000
Warranty repair 200,000 300,000
TOTAL ₱ 475,000 3.8% ₱ 600,000

Total costs of quality ₱ 1,600,000 12.8% ₱ 1,700,000

Victoria's Revenue (2000 x 10000 units) ₱ 20,000,000

Victoria's Cost of Quality Costs Percentage of Revenue

Prevention Costs
Designing (75 x 6000 hrs) ₱ 450,000 2.25%
Appraisal Costs
Testing and inspection (40 x 1 hr x 1000 ₱ 400,000 2.00%
Internal Failure Costs
Rework (500 x 5% x 10000 units) ₱ 250,000 1.25%
External Failure Costs
Repair (600 x 4% x 10000 units) ₱ 240,000 1.20%
Total Costs of Quality ₱ 1,340,000 6.70%

comment:
Victoria's Cost of Quality as a percentage of revenue is lower compared
to Vancouver's (6.7% compared to 10.2%) Victoria spent more in
prevention and appraisal costs thus making internal and external costs
lower which causes a lower costs of quality overall. Meanwhile
Vancouver spent low in prevention and appraisal costs that's why its
internal and external costs went high, making their overall costs of
quality worse compared to Victoria's.
 20x3
₱ 10,000,000

Percentage of revenue

2.0%

4.0%

5.0%

6.0%

17.0%

Vancouver's Revenue (1500 x 5000 units) ₱ 7,500,000

Vancouver's Cost of Quality Costs Percentage of Revenue

Prevention Costs
Designing (75 x 1000 hrs) ₱ 75,000 1.00%
Appraisal Costs
Testing and inspection (40 x 0.5 hr x 5000 units) ₱ 100,000 1.33%
Internal Failure Costs
Rework (400 x 10% x 5000 units) ₱ 200,000 2.67%
External Failure Costs
Repair (450 x 8% x 5000 units) ₱ 180,000 2.40%
Lost Sales (300 units x (1500-800)) 210,000 2.80%
Total External Failure Costs ₱ 390,000 5.20%
Total Costs of Quality ₱ 765,000 10.20%