At the end of 2008, Emery Manufacturing began to focus on its quality costs. As a first
Question:
At the end of 2008, Emery Manufacturing began to focus on its quality costs. As a first step, it identified the following costs in its accounting records as being quality related:
2008
Warranty | 120,000 |
Test labor | 90,000 |
Inspection labor | 75,000 |
Supplier evaluation | 9,000 |
Required
1. Prepare a quality cost report by quality cost category.
2. Calculate the relative distribution percentages for each quality cost category. Comment on the distribution.
3. Using the Taguchi quality loss function, an average loss per unit is computed at
$5. What are the hidden costs of external failure? How does this affect the rela- tive distribution? What effect will the hidden-cost information have on a quality- improvement program?
Cornerstones of Cost Management
ISBN: 978-1285751788
3rd edition
Authors: Don R. Hansen, Maryanne M. Mowen