Preparing a cost-of-quality report The following data have just been gathered on last year’s quality-related costs at the Ideal Company: COST CATEGORY AMOUNT Product recalls $325,000 Downtime due to defects 600,000 Warranty claims 420,000 Inspection of and testing of incoming materials 300,000 Product liability lawsuits 500,000 Process quality audits 350,000 Rework costs 2,000,000 Quality training 150,000 Process control monitoring 350,000 Repair costs in the field 375,000 Statistical process control 300,000 Waste 900,000 Net cost of scrap 1,500,000 Supplier certification 350,000 Quality engineering 200,000 Returned products 380,000 Total sales last year were $75,000,000. Required (a) Prepare a cost-of-quality report grouping costs into prevention, appraisal, internal failure, and external failure. Also show costs as a percentage of sales. (b) Interpret the data and make recommendations to Ideal’s management.

Preparing a cost-of-quality report The following data have just been gathered on last year’s quality-related costs at the Ideal Company: COST CATEGORY AMOUNT Product recalls $325,000 Downtime due to...

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Preparing a cost-of-quality report The following data have just been gathered on last year’s quality-related costs at the Ideal Company:

COST CATEGORY	AMOUNT
Product recalls	$325,000
Downtime due to defects	600,000
Warranty claims	420,000
Inspection of and testing of incoming materials	300,000
Product liability lawsuits	500,000
Process quality audits	350,000
Rework costs	2,000,000
Quality training	150,000
Process control monitoring	350,000
Repair costs in the field	375,000
Statistical process control	300,000
Waste	900,000
Net cost of scrap	1,500,000
Supplier certification	350,000
Quality engineering	200,000
Returned products	380,000

Total sales last year were $75,000,000.

Required

(a) Prepare a cost-of-quality report grouping costs into prevention, appraisal, internal failure, and external failure. Also show costs as a percentage of sales.

(b) Interpret the data and make recommendations to Ideal’s management.

Answered Same Day Dec 24, 2021

Solution

David answered on Dec 24 2021

116 Votes

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Preparing a cost-of-quality report The following data have just been gathered on last year’s quality-related costs at the Ideal Company: COST CATEGORY AMOUNT Product recalls $325,000 Downtime due to...

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