Osborn, Inc., produces cell phone equipment. Amanda Westerly, Osborn's president, decided to devote more resources to the

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Osborn, Inc., produces cell phone equipment. Amanda Westerly, Osborn's president, decided to devote more resources to the improvement of product quality after learning that her company had been ranked fourth in product quality in a 2010 survey of cell phone users. Osborn's quality-improvement program has now been in operation for 2 years, and the cost report shown here has recently been issued.
Semi-Annual COQ Report, Osborn, Inc. (In thousands) 6/30/2011 12/31/2011 6/30/2012 12/31/2012 Prevention costs $ 480 $ 4

Required
1. For each period, calculate the ratio of each COQ category to revenues and to total quality costs.
2. Based on the results of requirement 1, would you conclude that Osborn's quality program has been successful? Prepare a short report to present your case.
3. Based on the 2010 survey, Amanda Westerly believed that Osborn had to improve product quality. In making her case to Osborn management, how might Westerly have estimated the opportunity cost of not implementing the quality-improvement program?

Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...
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