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.

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 3 years ago

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