Question
In: Accounting
Tuscany Co. has the following information available: Quality engineering of products $20,000 Qualit
Tuscany Co. has the following information available:
Quality engineering of products $20,000
Quality training of employees $2,000
Net cost of scrap $30,000
Rework labor $4,500
Warranty repairs $100,000
Product recalls $200,000
Liability arising from defective products $1,000,000
Maintenance of test equipment $44,000
Quality improvement projects $55,000
Setups for testing $3,000
Supplies used in testing $5,500
Downtime caused by defects $70,000
Disposal of defective products $80,000
Prepare the quality cost report for the Tuscany Co. by classifying above costs into four types of quality costs.
Solutions
Expert Solution
| Quality Cost Report for Tuscany Company | ||
| Quality Cost category | Annual cost | |
| Prevention Costs: | ||
| Quality engineering of products | 20000 | |
| Quality training of employees | 2000 | |
| Quality improvement projects | 55000 | 77000 |
| Appraisal Costs: | ||
| Setups for testing | 3000 | |
| Supplies used in testing | 5500 | |
| Maintenance of test equipment | 44000 | 52500 |
| Internal Failure Costs: | ||
| Net cost of scrap | 30000 | |
| Rework labor | 4500 | |
| Downtime caused by defects | 70000 | |
| Disposal of defective products | 80000 | 184500 |
| External Failure Costs: | ||
| Warranty repairs | 100000 | |
| Product recalls | 200000 | |
| Liability arising from defective products | 1000000 | 1300000 |
| Total Quality Costs: | 1614000 |
__________________________________________END_____________________________________________________
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ekkarill92 answered 1 year agoRelated Solutions
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