The company would like to assess their success by evaluating the costs of quality (COQ) measures Expense
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 $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
Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young