17-70 Cost of Quality (COQ) Analysis; Nonfinancial Performance Measures (Note: This problem can be solved as a spreadsheet application and should be set up on a spreadsheet if Problem 17-71 is also assigned.) Acme Materials Company manufactures and sells synthetic coatings that can withstand high temperatures. Its primary customers are aviation manufacturers and maintenance companies. The following table contains financial information pertaining to COQ in 2022 and 2023 (in thousands of dollars): Required 1. Classify the cost items in the table into COQ categories. 2. Calculate the ratio of each COQ category to revenues in each of the 2 years. (Round all answers to 2 decimal places.) 3. Comment on the results. In conjunction with answering this question, calculate and refer to the following results: a. Percentage change (to 2 decimal places) in total COQ as a percentage of sales, from 2022 to 2023. b. Total COQ in 2023 expressed as a percentage (to 2 decimal places) of 2022 sales dollars. c. Percentage change in total prevention costs (to 2 decimal places), 2022 to 2023. d. Percentage change in total appraisal costs (to 2 decimal places), 2022 to 2023. e. Percentage change in total internal failure costs (to 2 decimal places), 2022 to 2023. f. Percentage change in total external failure costs (to 2 decimal places), 2022 to 2023. 4. In addition to the financial measures listed in the table, what nonfinancial measures might Acme monitor in its effort to achieve overall improvements in quality? 5. Are financial or nonfinancial quality measures likely of more use to (a) managers or (b) operating personnel? Why? 17-70 Cost of Quality (COQ) Analysis; Nonfinancial Performance Measures (Note: This problem can be solved as a spreadsheet application and should be set up on a spreadsheet if Problem 17-71 is also assigned.) Acme Materials Company manufactures and sells synthetic coatings that can withstand high temperatures. Its primary customers are aviation manufacturers and maintenance companies. The following table contains financial information pertaining to COQ in 2022 and 2023 (in thousands of dollars): Required 1. Classify the cost items in the table into COQ categories. 2. Calculate the ratio of each COQ category to revenues in each of the 2 years. (Round all answers to 2 decimal places.) 3. Comment on the results. In conjunction with answering this question, calculate and refer to the following results: a. Percentage change (to 2 decimal places) in total COQ as a percentage of sales, from 2022 to 2023. b. Total COQ in 2023 expressed as a percentage (to 2 decimal places) of 2022 sales dollars. c. Percentage change in total prevention costs (to 2 decimal places), 2022 to 2023. d. Percentage change in total appraisal costs (to 2 decimal places), 2022 to 2023. e. Percentage change in total internal failure costs (to 2 decimal places), 2022 to 2023. f. Percentage change in total external failure costs (to 2 decimal places), 2022 to 2023. 4. In addition to the financial measures listed in the table, what nonfinancial measures might Acme monitor in its effort to achieve overall improvements in quality? 5. Are financial or nonfinancial quality measures likely of more use to (a) managers or (b) operating personnel? Why
