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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
|
6/30/2016 (in thousands)
|
||||
|
% of
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% of total
|
|||
|
Actual
|
revenues
|
quality costs
|
||
Prevention costs
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|||||
Machine maintenance
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$430
|
||||
Supplier training
|
21
|
||||
Design reviews
|
110
|
||||
Total prevention costs
|
561
|
7
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%
|
27
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%
|
Appraisal costs
|
|||||
Incoming inspections
|
111
|
||||
Final testing
|
327
|
||||
Total appraisal costs
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438
|
5
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%
|
21
|
%
|
Internal failure costs
|
|||||
Rework
|
236
|
||||
Scrap
|
132
|
||||
Total internal failure costs
|
368
|
4
|
%
|
17
|
%
|
External failure costs
|
|||||
Warranty repairs
|
168
|
||||
Customer returns
|
570
|
||||
Total external failure costs
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738
|
9
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%
|
35
|
%
|
Total quality costs
|
$2,105
|
25
|
%
|
||
Total revenues
|
$8,280
|
12/31/2016 (in thousands)
|
||||
% of
|
% of total
|
|||
Actual
|
revenues
|
quality costs
|
||
|
||||
$430
|
||||
112
|
||||
219
|
||||
761
|
|
%
|
|
%
|
|
||||
131
|
||||
327
|
||||
458
|
|
%
|
|
%
|
|
||||
206
|
||||
121
|
||||
327
|
|
%
|
|
%
|
|
||||
82
|
||||
465
|
||||
547
|
|
%
|
|
%
|
$2,093
|
|
%
|
||
$9,060
|
Expert Solution
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Step 1:
The cost of quality would be classified into 4 categories.
- Prevention costs
- Appraisal costs
- Internal failure costs
- External failure costs
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