Blueprint Problem II: Trend Reports, Long-Range Reports Multiple-Period Quality Trend Report An interim quality report provides management with information concerning the within-period progress measured relative to specific goals. Also useful is a picture of h the quality improvement program has been doing since its inception. Trend in quality. costs as a percentage of sales reveals the effects of quality improvement initiativ over time. Expressing these trends by quality cost categories provides insight concerning the effect of quality improvement initiatives on the relative distribution of qu costs. Example: Assume that Harding Company has experienced the following results from its quality improvement program: 1. Table 1: Trend in Total Quality Costs Costs as a Percentage of Quality Costs Actual Sales Sales Year 1 $1,000,000 $5,000,000 20.0 % Year 2 990,000 5,500,000 18.0 Year 3 900,000 6,000,000 15.0 Year 4 868,000 6,200,000 14.0 Year 5 800,000 8,000,000 10.0 II. Table 2: Trend in Quality Cost Categories Internal External Prevention Appraisal Failure Failure II. Table 2: Trend in Quality Cost Categories Internal External Prevention Appraisal Failure Failure Year 1 2.0% 2.0% 6.0% 10.0% Year 2 3.0 2.4 4.0 8.6 Year 3 3.0 3.0 3.0 6.0 Year 4 4.0 3.0 2.5 2.5 Year 5 4.1 2.4 2.0 1.5 Required (any percentages calculated are rounded to the nearest tenth): 1. Based on Table 1, there has been a steady downward ample room for additional improvement. 2. Based on Table 2, Harding has had significant from % to trend in quality costs as a percentage of sales. The table also reveals that there is success in reducing failure costs . In fact, failure %. The fact that prevention costs have decreased dramatically costs have doubled likely played a major role in bring about this reduction. percent of the total quality costs to percent. Increasing control costs have apparently caused a(n) 3. In terms of the relative distribution of quality costs, Table 2 reveals that failure costs have gone from percent, whereas control costs have gone from percent to decrease in failure costs.