Question

Evans Company had total sales of $4,000,000 for fiscal 20x5. The costs of quality-related activities are given below. S280,000 160.000 Returns/allowances Design changes Prototype inspection Downtime Quality circles 8.000 300,000 16,000 12.000 Packaging inspection Field testing Complaint adjustment 12,000 280,000 Required: 1. Prepare a quality cost report, classifying costs by category and expressing each category as a percentage of sales. Round percentages to one decimal place, when rounding is required. For example, 5.78% would be entered as "5.8", Evans Company Quality Cost Report For the Year Ended 20x5 Quality Costs Total Percentage of Sales Prevention costs: Appraisal costs: Internal failure costs: II 00 00 Extemal failure costs: Total quality costs

Answer 1

D 2 Percentage of Sales 0.6% A B с 1 1 Evans Company Quality Cost Report 2 For the Year Ended 20x5 Quality 3 Costs Total 4 Prevention Costs: 5 Quality circles $16,000 6 Prototype inspection $8.000 $24,000 7 Appraisal Costs: 8 Field testing $12,000 9 Packaging inspection $12.000 $24,000 10 Internal Failure Costs: 11 Design changes $160,000 12 Downtime $300.000 $460.000 13 External Failure Costs: 14 Return Allowances $280,000 15 Complaint adjustment $280,000 $560.000 16 Total Quality Costs $1.068,000 0.6% 11.5% 14.0% 26.7% Calculations are shown below: 2 A B с D 1 1 Evans Company Quality Cost Report 2 For the Year Ended 20x5 Quality Percentage of 3 Costs Total Sales 4 Prevention Costs: 5 Quality circles 16000 6 Prototype inspection 8000 =B5+B6 =C6/4000000 7 Appraisal Costs: 8 Field testing 12000 9 Packaging inspection 12000 =B8+B9 =C9/4000000 10 Internal Failure Costs: 11 Design changes 160000 12 Downtime 300000 =B11+B12 =C12/4000000 13 External Failure Costs: 14 Return/ Allowances 280000 15 Complaint adjustment 280000 =B14+B15 C15/4000000 16 Total Quality Costs =C6+C9+C12+C15 =C16/4000000