Question
The company would like to assess their success by evaluating the costs of quality (COQ) measures Expense item 2021 2022 Lost sales from customer returns
The company would like to assess their success by evaluating the costs of quality (COQ) measures
Expense item 2021 2022
Lost sales from customer returns $70,000 $5,000
Downtime due to avoidable machine breakdown $50,000 $20,000
Incoming material testing $50,000 $70,000
Employee training $50,000 $75,000
Rework for slightly defective units $30,000 $10,000
Design reviews $10,000 $15,000
Supplier evaluation $5,000 $10,000
Warranty cost $50,000 $15,000
Design engineering $100,000 $150,000
Product liability insurance premium $10,000 $5,000
Scraped unit $70,000 $30,000
Product specification database $10,000 $35,000
Product replacement $20,000 $5,000
Preventive maintenance on production line equipment $30,000 $65,000
Production line inspection $70,000 $60,000
Total quality cost ? ?
Required
A) prepare a COQ report by calculating and presenting the costs I’d quality for each category and the ratio of each COQ category to total quality costs
B) Present a brief report that evaluates how well the company has done base on its COQ measure
Step by Step Solution
3.46 Rating (156 Votes )
There are 3 Steps involved in it
Step: 1
We first calculate the Cost of Quality COQ measures A COQ Report The COQ is broken down into two categories 1 The Cost of Poor Quality COPQ 2 The Cost of Good Quality COGQ 1 Cost of Poor Quality COPQ ...
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Step: 2
Step: 3
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Management Accounting Information for Decision-Making and Strategy Execution
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
6th Edition
137024975, 978-0137024971
