The Chief Executive Officer (CEO) of a manufacturing company based in Spain attended a conference in Tokyo on lean manufacturing. She was particularly impressed by a talk that discussed quality costing and control. The CEO knows that you are more than a mere number crunching Chief Accounting Officer, and that you have a particular interest in quality issues. She would therefore like you to explain some of the concepts that she came across at the conference. To help her prepare for the next Board of Directors meeting, she has asked you to draft a report that discusses quality costing and control.
Prepare a report, addressed to the CEO, that discusses quality costs and their significance to the company. Your report should include examples of various quality costs and their classification within a manufacturing environment. The report should also discuss what can be expected in terms of the cost of implementing quality costing and controls.