The following quality cost report came from the records of Willoughby Company: Required a. Explain the strategy
Question:
Required
a. Explain the strategy that Willoughby Company initiated to control its quality costs.
b. Indicate whether the strategy was successful or unsuccessful in reducing quality costs.
c. Explain how the strategy likely affected customer satisfaction.
Transcribed Image Text:
2018 2017 Amount Percentage Amount Percentage Prevention costs $136,000 13.74% $ 58,000 3.86% Engineering and design Training and education Depreciation on prevention equipment Incentives and awards 34,000 58,000 88,0008.89 3.43 it 12600) 30,000 1.99 2.66 Total prevention 316,000 31.92% 140,000 9.31% Appraisal costs Inventory inspection Reliability testing Testing equipment (depreciation) Supplies 32,000 22,000 4,000 2.22 1.41 11.92% 50,000 30,000 24,000 16,000 120,000 1.99 160 1.06 7.98% Total appraisal 180 nternal failure costs 48,000 98,000 24,000 8,000 178,000 L32 14.63 Scrap Repair and rework Downtime Reinspection 4.85 9.90 2.42 0.81000 80,000 220,000 24,000 364,000 I tio Total internal failure 17.98% 24.20% External failure cost Warranty repairs and replacement Freight Customer relations Restocking and packaging 220,000 48,000 56,000 54,000 378,000 $990,000 22.22 4.85 i66 5.45 38.18% 100.00% 520,000 34.57 100,000 120,000 140,000 880,000 58.51% 6.65 9.31 Total external failure Grand total $1,504,000 100.00%
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a The data in the quality cost report suggest that Willoughby initiated an a...View the full answer
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Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-1259569197
8th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Olds
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