Question

You are given the following environmental quality-related costs: Employee training Product design Supplier certification Process inspection Depreciation-pollution-control equipment Maintain pollution-control equipment clean up polluted lake Restore land after use Property damage claim $ 260,000 300,000 120,000 400,000 560,000 360,000 660,000 860,000 760,000 Required: 1. Prepare a cost-of-quality (COQ) report of environmental management for the year. Determine subtotals for each of the four reporting categories, and express each subtotal as a percentage of total operating expenses ($10,000,000) for the year. (Hint. Classify the pollution-control costs as internal failure costs, under the assumption that the process pollutes and that the pollution-control equipment used by the company controls the release of pollutants into the environment.) (Round your percentage answers to 1 decimal place.)

Answer 1

Cost-of-quality (COQ) report :- º on Particulars Amount $ Sub total Operating Epxenses 260,000 300,000 560,000 5.6% 120,000 400,000 520,000 5.2% Prevention costs :- Employee Training Product design Total Prevention costs Appraisal costs :- Supplier Certification Process Inspection Total Appraisal costs Internal failure costs :- Depreciation-Pollution control Equipment Maintainig Pollution-control Equipment Cleaning Up Polluted Lake Total Internal failure costs External failure costs :- Restoring Land after use Property Damage Claim Total External failure costs Total Cost of Quality 560,000 360,000 660,000 1,580,000 15.8% 860,000 760,000 1,620,000 4,280,000 16.2 42.8%