Greencity Sdn Bhd (GSB) manufactures scanners. The following represents its financial information for 2019 and 2020.

2019 2020

RM RM

Sales .. 1,960,000 1,760,000

Costs:

Process inspection .. 13,200 15,000

Scrap ... 14,800 15,500

Quality training .. 158,000 105,000

Warranty repairs . 34,000 38,000

Testing equipment .. 56,000 56,000

Customer complaints .. 22,500 27,200

Rework ... 136,000 148,000

Preventive maintenance . 108,000 76,000

Materials inspection ... 52,000 38,000

Field testing 75,000 99,000

Required:

(a) Prepare cost of quality (COQ) report for year 2019 and 2020.

(10 marks)

(b) Comment on the cost of quality report that you have prepared in (a) (4 marks)

(c) What are the primary limitations of COQ reports (similar to the one you prepared)? (4 marks)

(d) In what respect are traditional accounting systems deficient in terms of managing and controlling quality? (3 marks) (e) A member of the management team believes that employees will be more careful in their work if they are held responsible for mistakes. She suggests that that workers should do rework on their own time and they also should pay for disposal of defective units and the cost of scrap. The proposal estimates that the company can save quite a substantial amount of money in quality costs and the employees are less likely to make as many errors. Should SC implement the proposal? Why or why not? (4 Marks)