ll Sprint 12%D 12:03 AM Cost of Quality The president of Kokimo Company has become concerned. Over the last several years, costs have grown The president asked the controller to perform an activity analysis to gain a better insight into these costs. The activity analysis revealed the following: Activity Cost Activity Preventive machine maintenance Disposing of scrap Correcting invoice errors Final inspection Expediting production Disposing of materials with poor quality Responding to customer quality complaints Inspecting work in process Producing product Inspecting materials Total $45,000 125,000 30,000 38,000 65,000 45,000 120,000 22,000 200,000 10,000 $700,000 The production process in complicated by quality problems, requiring the production manager to expedite production and dispose of scrap. Required: Add Reply ll Sprint 12%D 12:04 AM Cost of Quality Activity Cost Preventive machine maintenance Disposing of scrap Correcting invoice errors Final inspection Expediting production Disposing of materials with poor quality Responding to customer quality complaints Inspecting work in process Producing product Inspecting materials Total $45,000 125,000 30,000 38,000 65,000 45,000 120,000 22,000 200,000 10,000 $700,000 The production process in complicated by quality problems, requiring the production manager to expedite production and dispose of scrap. Required: 1) Use the activity cost information to determine the percentage of total quality costs that are prevention, appraisal, internal failure, and external failure. 2) Interpret the information. For example, how much should the president be willing to commit to a Quality Improvement program? What types of activities could be included in the QI program? Add your own comments Add Reply