Question

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

Verifying credit card information	523,600
Customer service training	261,800
Discounting room rates due to poor customer service	130,900
Correcting charges to customer invoices	392,700
Total	$1,309,000

Sales are $7,700,000 for the year. Prepare a cost of quality report.

Present percentage values to one decimal place.

	Cost of Quality Report
Quality Cost Classification	Quality Cost	Percent of Total Quality Cost	Percent of Total Sales
Prevention	$	%	%
Appraisal	$	%	%
Internal Failure	$	%	%
External Failure	$	%	%
Total	$

Answer 1

	Cost of Quality Report
Quality Cost Classification	Quality Cost	Percent of Total Quality Cost	Percent of Total Sales
Prevention	261800	20.00%	3.4%
Appraisal	523600	40.00%	6.8%
Internal Failure	392700	30.00%	5.1%
External Failure	130900	10.00%	1.7%
Total	1309000
Sales	7700000
Prevention Costs are costs incurred to avoid or minimize the number of defects at first place.
So, Customer Service Training is Prevention Cost
Appraisal Costs are costs incurred to identify defective products before they are shipped to customers
Verifying CC information
Internal Failure costs incurred to remove defects from the products
Correcting Charges to customer invoices
External Failure Costs includes warranties, replacements etc
Discounting Room Rates due to poor customer Services are external failure