Question
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
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 cost of quality (COQ) in 2019 and 2020 (in thousands of dollars):
2019 | 2020 | ||||||
Sales | $ | 16,500 | $ | 20,500 | |||
Materials inspection | 350 | 65 | |||||
In-process (production) inspection | 165 | 130 | |||||
Finished product inspection | 300 | 75 | |||||
Preventive equipment maintenance | 25 | 65 | |||||
Scrap (net) | 550 | 350 | |||||
Warranty repairs | 750 | 500 | |||||
Product design engineering | 155 | 320 | |||||
Vendor certification | 15 | 65 | |||||
Direct costs of returned goods | 325 | 85 | |||||
Training of factory workers | 45 | 145 | |||||
Product testingequipment maintenance | 65 | 65 | |||||
Product testing labor | 260 | 95 | |||||
Field repairs | 75 | 45 | |||||
Rework before shipment | 290 | 205 | |||||
Product-liability settlement | 410 | 65 | |||||
Emergency repair and maintenance | 250 | 80 | |||||
QUESTIONS:
1. Classify the cost items in the table into cost-of-quality (COQ) categories. Calculate the ratio of each COQ category to revenues in each of the 2 years.
|
2. Calculate the percentage change in each COQ category and total COQ and comment on the results:
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started