Question

A quality control activity analysis indicated the following four activity costs of a hotel:

Inspecting cleanliness of rooms	$468,000
Processing lost customer reservations	156,000
Rework incorrectly prepared room service meal	78,000
Employee training	78,000
Total	$780,000

Sales are $3,900,000. Prepare a cost of quality report. Round percent of sales to one decimal place.

Answer 1

Solution:

Quality Cost Details	Cost	Percentages of costs	Percent of Total Sales
Prevention	$         78,000	10%	2.0%
Appraisal	$      468,000	60%	12.0%
Internal Failure	$         78,000	10%	2.0%
External Failure	$      156,000	20%	4.0%
Total	$      780,000	100%	20.0%

Percent of Total Sales = Cost / Sales