Question

Grady Industries manufactures freezers. Here is some information about its "LX17" line of freezers over the past year: € (Click the icon to view the information.) Read the requirements. Requirement 1. Prepare a Cost of Quality (COQ) report. In addition to calculating the total costs of each category, calculate the percentage of COQ category of the total COQ. (Round the percentage to the one tenth of a percent, X.X%. If a box is not used in the table leave the box empty; do not select a label or enter a zero.) Grady Cost of Quality Report Costs Total Costs of Percentage of Total Costs Incurred Quality of Quality (Rounded) Prevention Costs: Design engineering 84000 Total prevention costs 84000 % Appraisal Costs: Testing and inspection Total appraisal costs % Internal Failure Costs: Rework (internal)

Answer 1

grady Industries manufactures freezers. Here is some information about its "LX17" line of freezers over the past year:

Answer 2

1)	Gooding cost of quality report	cost incurred	total cost	% of total cost	working
			of quality	of quality
				(rounded )
	Prevention costs:
	Design engineering	84000			1200*70
	Total prevention costs		84000	13%
	Appraisal costs:
	Testing and inspection	25000			2500*0.5*20
	Total appraisal costs		25000	4%
	Internal failure costs:
	Rework (internal)	84000			2500*7%*480
	Total internal failure costs		84000	13%
	External failure costs:
	Rework (external)	55000			2500*4%*550
	Lost profits due to poor reputation	405000			450*(1600-700)
	Total external failure costs		460000	70%
	Total costs of quality		653000	100%

2) Variable rework cost at customer's home is generally higher than in-factory variable repair cost.

This is higher because it involves additional costs like cost of travelling, additional time spent by engineers, cost of time spent by customer service personnel in recording complaints, ensuring its clouser etc.

3) Cost of quality report gives total cost and activity wise break up of it.

Analysis of this helps in identifying reasons with the purpose that action can be taken to identify issues at an early stage or best to find ways to prevent it altogether by improving design.

Thus it helps in improvement of production processes and improving the product itself.