Question

You are given the following environmental quality-related costs:

Employee training	$	150,000
Product design		190,000
Supplier certification		65,000
Process inspection		345,000
Depreciation—pollution-control equipment		450,000
Maintain pollution-control equipment		250,000
Clean up polluted lake		550,000
Restore land after use		750,000
Property damage claim		650,000

Required:

1. Prepare a cost-of-quality (COQ) report of environmental management for the year. Determine subtotals for each of the four reporting categories, and express each subtotal as a percentage of total operating expenses ($10,000,000) for the year. (Hint: Classify the pollution-control costs as internal failure costs, under the assumption that the process pollutes and that the pollution-control equipment used by the company controls the release of pollutants into the environment.) (Round your percentage answers to 1 decimal place.)

Answer 1