The following information shows last year's quality-related costs for the Madrigal Company: Total sales for the year
Question:
The following information shows last year's quality-related costs for the Madrigal Company:
Total sales for the year were $120,000,000.Required(a) Prepare a cost-of-quality report grouping costs into prevention, appraisal, internal failure, and external failure. Also show costs as a percent of sales.(b) Interpret the data and make recommendations to Madrigal's management.
Transcribed Image Text:
AMOUNT ПЕМ Quality engineering $600,000 Warranty claims 2,814,000 Product liability lawsuits 5,400,000 Research of customer needs 90,000 Maintenance of test equipment Returned products 420,000 1,440,000 Rework costs 1,440,000 Quality training Process control monitoring 150,000 1,200,000 Inspection of and testing of incoming materials 480,000 Repair costs in the field 1,020,000 300,000 Statistical process control 2,400,000 Product recalls Waste 840,000 Net cost of scrap 762,000 Product quality audits Downtime due to defects 570,000 150,000 Supplier certification 108,000
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ab Quality Cost Report for Madrigal Company Quality Cost Category Annual Cost Percent of Sales Prevention Costs Quality training 150000 013 Quality engineering 600000 050 Statistical process control 3...View the full answer
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Related Book For
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
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