Question

Quality Cost Report

Evans Company had total sales of $3,000,000 for fiscal 2015. The costs of quality-related activities are given below.

Returns/allowances	$180,000
Design changes	195,000
Prototype inspection	6,000
Downtime	135,000
Quality circles	12,000
Packaging inspection	6,000
Field testing	15,000
Complaint adjustment	135,000

Required:

Hide 1. Prepare a quality cost report, classifying costs by category and expressing each category as a percentage of sales. Round percentages to one decimal place, when rounding is required. For example, 5.78% would be entered as "5.8". Evans Company Quality Cost Report For the Year Ended 2015 Quality Costs Total Percentage of Sales Prevention costs: $   $     % Appraisal costs: $   Internal failure costs: $   External failure costs: $   Total quality costs $     %

Answer 1

	Quality Costs	Total	Percentage of sales
Preventive Costs
Prototype inspection	$           6,000
Quality circles	$         12,000	$   18,000	0.6%
Appraisal costs
Packaging inspection	$           6,000
Field testing	$         15,000	$   21,000	0.7%
External failure Costs
Returns/allowances	$       180,000
Complaint adjustment	$       135,000	$ 315,000	10.5%
Interrnal failure Costs
Design changes	$       195,000
Downtime	$       135,000	$ 330,000	11.0%
Total		$ 684,000	22.8%

Note: Percentage of sales is calculated as Total / 3,000,000 * 100.

For example : 18,000 / 3,000,000 * 100 = 0.6%.

In case of any doubt, please comment.