Classification of Quality Costs [LO10]

A number of activities that are a part of a company’s quality control system are listed below:

a. Product testing.

b. Product recalls.

c. Rework labor and overhead.

d. Quality circles.

e. Downtime caused by defects.

f. Cost of field servicing.

g. Inspection of goods.

h. Quality engineering.

i. Warranty repairs.

j. Statistical process control.

k. Net cost of scrap.

l. Depreciation of test equipment.

m. Returns and allowances arising from poor quality.

n. Disposal of defective products.

o. Technical support to suppliers.

p. Systems development.

q. Warranty replacements.

r. Field testing at customer site.

s. Product design.

Required:

1. Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost.

2. Which of the four types of costs in (1) above are incurred in an effort to keep poor quality of conformance from occurring? Which of the four types of costs in (1) above are incurred because poor quality of conformance has occurred?

Answer rating: 100% (QA)

Cost Cost Category aProduct testing bProduct recalls Appraisal cost External failure costs c Rework ... View the full answer