Question

quality cost
loan processing

1. run credit checks: $2,426.59 appraisal
2. review documents: $3,160.71 appraisal
3. make document corrections; gather additional information: $1,321.45 internal failure
4. prepare tickler file; review and follow up on titles, insurance, second meetings: $193.85 appraisal
5. review all output: $2,496.76 appraisal
6. correct rejects and incorrect output: $453.20 internal failure
7. reconcile incomplete collateral report: $74.42 internal failure
8. handle dealer problem calls; address associate problems; research and communicate information: $2,700.00 external failure
9. compensate for system downtime: $530.73 internal failure
10. conduct training: $1,500.00 prevention

loan payment

1. receive, inspect, and process payments: $780.00 appraisal
2. respond to inquiries when no coupon is presented with payments: $813.55 external failure

loan payoff

1. receive, inspect, and process payoff and release documents: $205.43 appraisal
2. research payoff problems: $15.90 external failure

calculate the amount and the percent of total. do not round intermediate calculations. round the monetary values to the nearest cent and percentage values to two decimal places.
quality cost category total amount percentage of total quality cost
prevention $
appraisal $
internal failure $
external failure $

Explanation:

Step1: Calculate total quality cost

Add up all the individual costs:
$2426.59 + 3160.71+1321.45 + 193.85+2496.76+453.20+74.42+2700.00+530.73+1500.00+780.00+813.55+205.43+15.90$
$=\$16662.69$

Step2: Calculate total cost for prevention category

The prevention - cost is the cost of conducting training, which is $\$1500.00$.

Step3: Calculate percentage for prevention category

The percentage of prevention cost to total quality cost is $\frac{1500.00}{16662.69}\times100\%\approx8.99\%$

Step4: Calculate total cost for appraisal category

$2426.59+3160.71 + 193.85+2496.76+780.00+205.43=\$9263.34$

Step5: Calculate percentage for appraisal category

The percentage of appraisal cost to total quality cost is $\frac{9263.34}{16662.69}\times 100\%\approx55.59\%$

Step6: Calculate total cost for internal - failure category

$1321.45+453.20+74.42+530.73=\$2379.80$

Step7: Calculate percentage for internal - failure category

The percentage of internal - failure cost to total quality cost is $\frac{2379.80}{16662.69}\times100\%\approx14.28\%$

Step8: Calculate total cost for external - failure category

$2700.00+813.55+15.90=\$3529.45$

Step9: Calculate percentage for external - failure category

The percentage of external - failure cost to total quality cost is $\frac{3529.45}{16662.69}\times100\%\approx21.18\%$

Answer:

Quality Cost Category	Total Amount	Percentage of Total Quality Cost
Appraisal	$\$9263.34$	$55.59\%$
Internal failure	$\$2379.80$	$14.28\%$
External failure	$\$3529.45$	$21.18\%$