FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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6/30/2016 (in thousands)
 
 
% of
% of total
 
Actual
revenues
quality costs
Prevention costs
         
Machine maintenance
$430
       
Supplier training
21
       
Design reviews
110
       
Total prevention costs
561
7
 
%
27
 
%
Appraisal costs
         
Incoming inspections
111
       
Final testing
327
       
Total appraisal costs
438
5
 
%
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
738
9
 
%
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
Check Mark
Step 1:

The cost of quality would be classified into 4 categories.

  1. Prevention costs
  2. Appraisal costs
  3. Internal failure costs
  4. External failure costs 
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