Question

[The following information applies to the questions displayed below) Acme Materials Company manufactures and sells synthetic coatings that can withstand high temperatures. Its prima customers are aviation manufacturers and maintenance companies. The following table contains financial informatic pertaining to cost of quality (COQ) in 2019 and 2020 (in thousands of dollars): 2019 $15,000 209 150 150 2020 $19,000 50 Sales Materials inspection In-process (production) inspection Finished product inspection Preventive equipment maintenance Scrap (net) Warranty repairs Product design engineering Vendor certification Direct costs of returned goods Training of factory workers Product testing-equipment maintenance Product testing labor Field repairs Rework before shipment Product liability settlement Emergency repair and maintenance Required: 1. Classify the cost items in the table into cost-of-quality (COQ) categories 2 Calculate the ratio of each COQ category to revenues in each of the 2 years. 3. Calculate the percentage change in each COQ category and total COQ and comment on the results a. Percentage change in total COQ as a percentage of sales, from 2019 to 2020, b. Total COQ in 2020 expressed as a percentage of 2019 sales dollars: c. Percentage change in total prevention costs, 2019 to 2020 d. Percentage change in total appraisal costs, 2019 to 2020: e. Percentage change in total internal failure costs, 2019 to 2020: . Percentage change in total external failure costs, 2019 to 2020

Answer 1

Answer with working is given below

2020 Cost % of Sales Req 1 and 2 Statement showing "Total Cost of Quality" 2019 % of Particulars of Cost Cost Sales Cost of Quality Prevention Cost Preventive Equipment maintenance 0.07% Product Design Engineering $140 0.93% Vendor Certification Training of Factory workers $30 0.20% Product testing - Equipment maintenance $50 0.33% $10 $30 0.20% $50 $170 $50 $130 $50 0.26% 0.89% 0.26% 0.68% 0.26% $260 1.73% $450 2.37% $50 Total Preventive Costs Appraisal Cost Material Inspection In-process (production) inspection Finished product inspection Product testing labor $200 $150 $150 $115 1.33% 1.00% 1.00% 0.73% 0.26% 0.61% 0.32% $110 $60 $80 0.42% $610 4.07% $305 1.61% Total Appraisal Costs Internal Failure Costs Scrap Rework before shipment Emergency Repair and maintenance $400 1.05% $140 $100 2.67% 0.93% 0.67% $200 $190 $65 1.00% 0.34% $640 $455 2.39% Total Internal Failure Costs External Failure Costs Warranty Repairs Direct cost of returned goods Field Repairs Product Liability Settlement $600 $175 $60 $350 $70 4.00% 1.17% 0.40% 1.73% 1.84% 0.37% 0.16% 0.26% $30 $260 $50 Total External Failure Costs $1,095 7.30% $500 2.63% Total Quality cost $2,605 17.37% $1,710 9.00% 3.a) Percentage change in total CoQ as a percentage of Sales from 2019 to 2020 -22.38% 3.b) Total COQ in 2020 expressed as a percentage of 2019 Sales Dollars 11.40% 3.c) Percentage change in total prevention cost from 2019 to 2020 73.08% 3.d) Percentage change in total appraisal cost from 2019 to 2020 -50.00% 3.) Percentage change in total internal failure cost from 2019 to 2020 -28.91% 3.f) Percentage change in total external failure cost from 2019 to 2020 -54.34% Working Note 2019 2020 Total Prevention Cost Total Appraisal Cost Internal Failure Costs External Failure Costs $260 $610 $640 $1,095 $2,605 $450 $305 $455 $500 $1,710 Total % Change Change $190 73.1% $305 -50.0% -$185 -28.9% $595 -54.3% -$895 Total Sales Total Cost of Quality 2019 $15,000 $2,605 2020 Change $19,000 $4,000 $1,710 -$895 -22.38%