Course Name : Quality Management

Lusaka Engineering Company (LEC) had actual quality costs for the year ended December 31, 2022, as given below: At the zero-defect state, LEC expects to spend $375,000 on Prototype verification, $75,000 on Vendor certification, and $50,000 on Process acceptance. Assume sales to be $25,000,000. Required: (a) Prepare a Cost of Quality report for 2022 using the PAF Model. What does this report tell the management of LEC? [15 marks] (b) Prepare a Cost of Quality report for the Zero-Defect State using the PAF Model. Explain why quality costs still are present for the zero-defect state. [15 marks] (c) What if LEC achieves the zero-defect state reflected in the report in part (b), what are some of the implications of this achievement? [10 marks]