CVI, Inc., had November sales totaling $4,200,000 and incurred the

CVI, Inc., had November sales totaling $4,200,000 and incurred the following quality-related costs:

Spoiled work-in-process inventory disposal.................................$28,000

Downtime, due to quality problems............................................ 24,000

Field test of new computer......................................................74,000

Support of a customer complaint department................................ .26,000

Product liability insurance...............................................................18,000

Quality training...............................................................................12,000

Re-inspection.................................................................................13,000

Rework (labor and overhead) .................................................................8,000

New vendor verification and facilities inspection........................................25,000

Technical support provided to vendors.......................................................4,000

Equipment inspection...............................................................................20,000

Test and inspection of purchased parts.....................................................32,000

Warranty repairs.....................................................................................22,000

Required

1. Prepare a cost-of-quality (COQ) report for November, with appropriate classifications. For each of the four major categories in your report, present total category cost as a percentage of total COQ for the period and as a percentage of sales.

2. Offer some observations regarding the data presented in your report, in terms of the process of managing and controlling quality costs.

3. What are the primary limitations of COQ reports, similar to the one you prepared?

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