CVI, Inc. had November sales totaling $4,200,000, and incurred the following quality-related costs:

Spoiled work-in-process inventory disposal…………………………………………………………………………………..	$28,000
Downtime, due to quality problems………………………………………………………………………………………….	$24,000
Filed test of new computer…………………………………………………………………………………………………..	$74,000
Support of a customer complaint department…………………………………………………………………………………..	$26,000
Product liability insurance………………………………………………………………………………………………………	$18,000
Quality training…………………………………………………………………………………………………………………	$12,000
Re-inspection………………………………………………………………………………………………………………….	$13,000
Rework (labor and overhead)…………………………………………………………………………………………………..	$8,000
New vendor verification and facilities inspection………………………………………………………………………………….	$25,000
Technical support provided to vendors….……………………………………………………………………………………….	$4,000
Equipment inspection……………………………………………………………………………………………………………..	$20,000
Test and inspection of purchased parts…………………………………………………………………………………………..	$32,000
Warranty repairs……………………………………………………………………………………………………………….	$22,000
November sales ($)……………………………………………………………………………………………………………	$4,200,000

Requirements

1. Prepare a Cost-of-Quality (COQ) report for November, with appropriate classifications. For each of the four major categories in your report, present total category cost as a percentage of total COQ for the period and as a percentage of sales.

2. Offer some observations regarding the data presented in your report, in terms of the process of managing and controlling quality costs.

3. What are the primary limitations of COQ reports, similar to the one you prepared?