CLS04

Module 4 Hilltop Restaurant Hilltop Restaurant is a 300-room hotel in South Florida. The hotel restaurant has a comfortable and casual atmosphere offering quality food at affordable prices. The restaurant serves breakfast, lunch, and dinner. Lunch and dinner were receiving favorable responses from both the hotel guests and walk-in business. However, reviews for breakfast were unfavorable. After interviewing the controller, food and beverage director, executive chef and the restaurant manager, the following information for breakfasts was gathered for the past two years. Cost 2012 2011 Cost 2012 2011 Breakdown maintenance I $525 $960 Product testing equipment A 840 1,380 Customer service E 300 600 Production inspection A 975 1,080 Design menu P 1,680 840 Returned meals (room service) E 1,650 840 Discount due to defects E 1,050 2,160 Rework costs I 1,275 1,800 Equipment maintenance P 1,050 360 Scrap I 1,950 2,640 Incoming products inspection A 600 300 Training P 2,640 900 Lost sales E 2,250 3,000 Vendor evaluation P 630 300 Product testing (labor & material) A 945 2,040 $18,360 $19,200 Total: a) In the ‘cost’ column, place a ‘P’ for Prevention cost, ‘A’ for Appraisal cost, ‘I’ for Internal Failure cost or ‘E’ for External Failure cost 1 . b) Complete the following COQ table. 2012 2011 Control costs Prevention costs $6,000 $2,400 Appraisal costs 3,360 4,800 Sub total $9,360 $7,200 Failure costs Internal failure $3,750 $5,400 External failure 5,250 6,600 Sub total $9,000 $12,000 Total $18,360 $19,200 HVAC Manufacturing 1 Prevention costs : efforts to prevent product defects; Appraisal costs : efforts from inspections to assess product quality levels; Internal failure costs : defects found prior to shipment; External failure costs : defects after products reach customer.