Question 5 (7 Marks)

A: Goldcoast Ltd makes chairs for outside living spaces. The company has been working on improving quality over the past year and wants to evaluate how well it has done on costs-of-quality (COQ) measures. Below are costs of quality,

1.Supplier evaluation cost

2.Scrap cost

3.Warranty repair costs

4.Design engineering cost

5.Inspection cost

6.Rework cost

Required:

Identify the cost-of-quality (COQ) category (prevention, appraisal, internal failure and external failure) for each of these costs. (3 marks)

B. The Goldcoast Ltd is investigating the possibility of adopting just-in-time (JIT) purchasing. The CEO comes to you, Senior Management Accounting for advices. Please provide constructive suggestions on the adoption of JIT purchasing by addressing both the benefits and risks.(4 marks)