You have been asked by the CEO of Whitehorse Janitorial Supplies Ltd. (WJS) to review the costs of quality for the month of April. All amounts are in thousands (000's).

Cost Item

Amount

Product testing

$350

Clean up of toxic spills within the plant

$14,200

Employee quality training

$200

Payments on lawsuits from product failures

$25,000

Quality Engineering

$675

Supplies used in testing

$500

Statistical Process Control

$1,750

Revenue

$345,000

Some information from a competitor, Yukon Cleaning Inc. (YC), has been leaked. You learn that YC's costs of quality (as a percentage of revenue) are 0.5% on external failure, 0.8% on internal failure, 5% on appraisal and 8% on prevention.

Required:

a.make cost of quality report for April for WJS. The report should list all cost items categorized by type of quality cost, including percentages in relation to revenues for each category.

b.Explain to the CEO of WJS, which organization (WJS or YC) has the better approach to quality management. Provide a recommendation for quality cost improvement at WJS.