Acc502: Operations Management Accounting

Question 2 (12 marks) Bath Products Ltd manufactures a variety of bath and beauty products for specialty stores. The company has recently introduced the concept of identifying cost of quality and has identified the following costs for the month: Rework time $ 12,000 Cost of defective products that cannot be reused $14,000 Laboratory testing for safety $18,000 Training of quality control supervisors $21,000 Customer complaints $11,600 Inspection of purchased ingredients $7,800 Product liability $1000 Sales Revenue for the month was $100,000. Required: 1. Prepare a cost of quality report for Bath Products Lid. The report should include the following information: . Classification of the above costs as internal failure, external failure, appraisal and prevention costs. (3 marks) . Calculation of each cost with respect to percentage of sales. (3 marks) Calculation of each cost with respect to percentage of total quality costs. (3 marks) 2. Prepare a report for the management of Bath Products Lid, commenting on the analysis in requirement ( 1) and providing suggestion for improvement