Cost of Quality Report
Meagher Solutions Inc. manufactures memory chips for personal computers. An activity analysis was conducted, and the following activity costs were identified with the manufacture and sale of memory chips:
a. Identify the cost of quality classification for each activity.
Quality Activities | Activity Cost | Quality Cost Classification | |||
Correct shipment errors | $150,000 | ||||
Disposing of scrap | 95,000 | ||||
Emergency equipment maintenance | 125,000 | ||||
Employee training | 50,000 | ||||
Final inspection | 80,000 | ||||
Inspecting incoming materials | 60,000 | ||||
Preventive equipment maintenance | 40,000 | ||||
Processing customer returns | 90,000 | ||||
Scrap reporting | 45,000 | ||||
Supplier development | 15,000 | ||||
Warranty claims | 250,000 | ||||
Total | $1,000,000 |
b. Prepare a cost of quality report. Assume that the sales for the period were $4,000,000. If required, round percents to one decimal place.
Meagher Solutions Inc. | |||
Cost of Quality Report | |||
Quality Cost Classification | Quality Cost | Percent of Total Quality Cost | Percent of Total Sales |
Prevention | $ | % | % |
Appraisal | % | % | |
Internal failure | % | % | |
External failure | % | % | |
Total | $ | % | % |
Cost of Quality Report Meagher Solutions Inc. manufactures memory chips for personal computers. An activity analysis...
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