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Preparing a cost-of-quality report The following data have just been gathered on last year’s quality-related costs at the Ideal Company COST CATEGORY AMOUNT Product recalls $325000 Downtime due

Preparing a cost-of-quality report The following data have just been gathered on last year’s quality-related costs at the Ideal Company:

COST CATEGORY

AMOUNT

Product recalls

$325,000

Downtime due to defects

600,000

Warranty claims

420,000

Inspection of and testing of incoming materials

300,000

Product liability lawsuits

500,000

Process quality audits

350,000

Rework costs

2,000,000

Quality training

150,000

Process control monitoring

350,000

Repair costs in the field

375,000

Statistical process control

300,000

Waste

900,000

Net cost of scrap

1,500,000

Supplier certification

350,000

Quality engineering

200,000

Returned products

380,000

Total sales last year were $75,000,000.

Required

(a) Prepare a cost-of-quality report grouping costs into prevention, appraisal, internal failure, and external failure. Also show costs as a percentage of sales.

(b) Interpret the data and make recommendations to Ideal’s management.

Jul 01 2020 View more View Less

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