X Company has the following information available for the year 2014: Quality engineering of products $20,000 Quality
Question:
X Company has the following information available for the year 2014:
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
Sales revenue $5,000,000
Required:
a. Prepare the quality cost report.
b. what are your recommendations to control quality costs?
c. Explain the uses and limitations of a cost of quality report.
Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young