Exercise 12-8 (Algo) Cost of Quality [LO12-2]

Walton Company has measured its quality costs for the past two years. After the company gathers its quality cost data, it summarizes those costs using the four categories shown below:

	Last Year	This Year
Prevention costs	$ 339,200	$ 637,000
Appraisal costs	$ 467,300	$ 496,000
Internal failure costs	$ 853,200	$ 545,000
External failure costs	$ 1,001,000	$ 734,400

Required:

1. Calculate the total cost of quality last year and this year.

2. For last year, calculate the cost in each of the four categories as a percent of the total cost of quality.

3. For this year, calculate the cost in each of the four categories as a percent of the total cost of quality.

4-a. Calculate the change in total cost of quality over the two-year period.

4-b. Is performance trending in a favorable or unfavorable direction?