1. Describe four quality-related costs that O’Deesha might incur and tell how they are related. (10 marks)

2. Based on the four quality-related costs discussed a) above, prepare the quality cost report for the O’Deesha Company, using the information given. (15 marks)

O’Deesha Company has the following information available:

Quality engineering of products.......................$20,000

Quality training of employees.............................$2,000

Net cost of scrap................................................$30,000

Rework labor.......................................................$4,500

Warranty repairs.............................................$100,000

Product recalls...............................................$200,000

Liability arising from defective products ..$1,000,000

Maintenance of test equipment.......................$44,000

Quality improvement projects.........................$55,000

Setups for testing................................................$3,000

Supplies used in testing.....................................$5,500

Downtime caused by defects.........................$70,000

Disposal of defective products.......................$80,000

Answer rating: 100% (QA)

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