QUESTION 1 Quality (7 marks)

You have been asked by the CEO of Yukon Janitorial Supplies Ltd. (YJS) to review the costs of quality for the month of April. All amounts are in thousands (000's).

Cost Item	Amount
Product testing	$350
Clean up of toxic spills within the plant	$14,200
Employee quality training	$200
Payments on lawsuits from product failures	$25,000
Quality Engineering	$675
Supplies used in testing	$500
Statistical Process Control	$1,750
Revenue	$345,000

Some information from a competitor, Whitehorse Cleaning Inc. (WC), has been leaked. You learn that WCs costs of quality (as a percentage of revenue) are 0.5% on external failure, 0.8% on internal failure, 5% on appraisal and 8% on prevention.

Required:

1. Prepare a cost of quality report for April for YJS. The report should list all cost items categorized by type of quality cost, including percentages in relation to revenues for each category. (4 marks)

b.Explain to the CEO of YJS, which organization (YJS or WC) has the better approach to quality management. Provide a recommendation for quality cost improvement at YJS. (3 marks)