Question 1 Cost of Quality Report 20 marks Ace Ltd. manufactures and sells kids motorbikes. The Company's management is concerned about the quality of their product and has asked the management accountant to identify all the quality related costs and submit a report. The following list of quality costs have been identified by the accountant, for the financial year ended 30th September 2019, 6 000 25 000 12 000 Quality Costs Technical support to suppliers of materials (used in the manufacture of bikes) Finished goods inspection Product design reviews Quality testing Rework Scrap Employee quality training Customer quality complaints Returned goods Sales revenue for the Company was $950 000 for the same financial year. 5 000 9 000 15 000 35 000 20 000 10 000 Required: (a) Prepare a cost of quality report in tabulated form) which should consist of the following information: i Classification of the quality costs under prevention costs, appraisal costs, internal failure costs, and external failure costs categories. (9 marks) ii. Calculation analysis in terms of percentage of total quality costs. (4 marks) Calculation Analysis in terms of percentage of total sales. (5 marks) (b) Explain how management can benefit from cost of quality report, (2 mark) Note: Round off your answers to one decimal place (1 d. p.). 1