Question

can someone help me with 3b?

Required information

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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 (COQ) in 2019 and 2020 (in thousands of dollars):

	2019			2020
Sales	$	15,300		$	19,300
Materials inspection		230			53
In-process (production) inspection		153			118
Finished product inspection		180			63
Preventive equipment maintenance		13			53
Scrap (net)		430			230
Warranty repairs		630			380
Product design engineering		143			200
Vendor certification		27			53
Direct costs of returned goods		205			73
Training of factory workers		33			133
Product testing—equipment maintenance		53			53
Product testing labor		140			83
Field repairs		63			33
Rework before shipment		170			193
Product-liability settlement		290			53
Emergency repair and maintenance		130			68

Required:

1. Classify the cost items in the table into cost-of-quality (COQ) categories.

2. Calculate the ratio of each COQ category to revenues in each of the 2 years.

3. Calculate the percentage change in each COQ 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 COQ 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;

f. Percentage change in total external failure costs, 2019 to 2020.

Calculate the percentage change in each COQ category and total COQ and comment on the results: (Round your answers to 2 decimal places.)

3a. Percentage change in total COQ as a percentage of sales, from 2019 to 2020 9.36 % decrease 3b. Total COQ in 2020 expressed as a percentage of 2019 sales dollars % 3c. Percentage change in total prevention costs, 2019 to 2020 103.24 % increase 3d. Percentage change in total appraisal costs, 2019 to 2020 (51.06) % decrease 3e. Percentage change in total internal failure costs, 2019 to 2020 (32.74) % decrease 3f. Percentage change in total external failure costs, 2019 to 2020 (54.63) % decrease

Answer 1

Cost of Quality in 2020 = Sum total of all the costs

= 53 + 118 + 63 + 53 + 230 + 380 + 200 + 53 + 73 + 133 + 53 + 83 + 33 + 193 + 53 + 68

= $1,839

Sales of 2019 = $15,300

Total Cost of Quality in 2020 expressed as a percentage of 2019 sales dollars = $1,839 / $15,300

= 12.02%