Question

Required Information (The following information applies to the questions displayed below.) Acme Materials Company manufactures and sells synthetic coatings that can withstand high temperatures. Its primary customers are aviation manufacturers and maintenance companies. The following table contains financial information pertaining to cost of quality (COA) in 2019 and 2020 (in thousands of dollars); 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 2019 2020 $16,900 $20,900 390 69 169 134 340 79 29 69 590 390 790 540 159 360 19 69 365 89 49 149 69 69 300 99 79 49 209 450 69 290 84 330 Required: 1. Classify the cost items in the table into cost-of-quality (COO) categories 2. Calculate the ratio of each coa category to revenues in each of the 2 years. 3. Calculate the percentage change in each coa 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 COO 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 1. Percentage change in total external failure costs, 2019 to 2020

Answer 1

Clipboard .00 6 Insert Delete Format Font Alignment Conditional Format as Cell Formatting Table Styles Styles Number Clear- Sort & Find 8 Filter - Select Editing B32 Total External Failure Costs Cells A С 21 D E F 22 B Internal Failure Costs : Scrap (Net) Rework (before Shipment) Emergency Repairs and Maintenance Total Internal Failure Costs 590 23 390 330 209 24 25 290 4 84 1,210 7.16% 683 3.27% 26 27 28 790 29 540 89 30 External Failure Costs : Warranty Repairs Dirert Costs of Returned Goods Field Repairs Product Liability Settlement Total External Failure Costs Sheet 1306 | Sheet 1307 49 31 365 79 450 1,684 69 32 B 5 9.96% 747 3.57% Sheet 1305 Sheet 1308 Sheet 1309 Sheet 1310 Ready HE 1903

Formal Alignment Number el Formatting Table Styles Styles Clear F24 Sort & Find a Filter - Select Editing Cells A 14 C D E 77 15 Part 3 B 16 17 Total Costs of Quality for 2020 = 2,527 Total Sales in 2019 = $ 16,900 18 19 20 Total con in 2020 as a percentage of 2019 Sales = COQ for 2020 / Total Sales 2019 * 100 Total CoQ in 2020 as a percentage of 2019 Sales = 2,527 / 16,900 * 100 Total coQ in 2020 as a percentage of 2019 Sales = 14.95 % 21 22 2 23 24 Sheet 1305 Sheet 1306 Sheet 1307 Sheet 1308 Sheet 1309 Sheet 1310 + Ready 16 20096

Number select Styles Cells A1 > ✓ Editing REQUIREMENT 3 C to 3 F R A B. 1 2 C E G REQUIREMENT 3 C to 3 F 2019 2020 Amount % of Sales Amount % of Sales Change = E-C % Change = G/C*100 16,900 20,900 3 S.No. 4 1 5 6 7 Particulars Sales Cost of Quality Prevention Costs: Preventive Equipment Maintenance Vendor Certification Training of Factory Workers Product Design Engineering Total Prevention Costs 29 69 8 19 69 9 49 149 10 159 360 11 2 256 1.51% 647 3.10% 391 152.73% 12 13 Appraisal Costs : Materials Inspection 14 390 69 D.cod.tian Lacna Sheet 1305 Sheet 1306 Sheet 1307 154 Sheet 1308 Sheet 1309 1 co Sheet 1310 + Ready 16096

Number B21 Styles fi Internal Failure Costs : Cells Filter Select Editing А С D 13 E F G H 14 15 69 B Appraisal Costs : Materials Inspection Production Inspection Finished Product Inspection Product Testing - Equipment Maintenance Product Testing - Labor Total Appraisal Costs 390 169 340 16 134 79 17 69 69 18 300 99 19 3 1,268 7.50% 450 2.15% 20 (818) -64.51% 21 22 590 390 23 Internal Failure Costs : Scrap (Net) Rework (before Shipment) Emergency Repairs and Maintenance Total Internal Failure Costs 330 209 24 290 84 25 4 1,210 7.16% 683 3.27% (527) -43.55% 26 27 Eutarnal Enilura Corte. Sheet 1305 Sheet 1306 Sheet 1307 Sheet 1308 Sheet 1309 Sheet 1310 + Ready 16096