Backwoods American, Inc., produces expensive water-repellent, down-filled parkas. The company implemented a total quality-management program in 2014. Following are quality-related accounting data that have been accumulated for the five-year period after the program’s start.

a. Compute the company’s total failure costs as a percentage of total quality costs for each of the five years. Does there appear to be a trend to this result? If so, speculate on what might have caused the trend.

b. Compute prevention costs and appraisal costs, each as a percentage of total costs, during each of the five years. Speculate on what the company’s quality strategy appears to be.

c. Compute quality-sales indices and quality-cost indices for each of the five years. Is it possible to assess the effectiveness of the company’s quality-management program from these index values?

d. List several examples of each quality-related cost—that is, prevention, appraisal, and internal and external failure—that might result from the production of parkas. 

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Manufacturing 2015 Quality Costs (000s) Prevention $3.2 10.7 28.3 42.6 Appraisal 26.3 29.2 30.6 24.1 Internal failure 39.1 51.3 48.4 35.9 External failure 118.6 110.5 105.2 91.3 Accounting Measures (000s) Sales cost Year 2016 2017 2018 2019 50.0 19.6 32.1 65.2 $2,700.6 2,690.1 2,705.3 2,310.2 2,880.7 420.9 423.4 424.7 436.1 435.5