Cost of qualityManagers at Walla-Walla LTD want to determine the company’s cost of quality. The following information has been gathered from the records for August:Defective units9,000Units reworked1,800Defective units returned600Appraisal costs$26,250Cost per unit for rework$18Prevention costs$127,500Profit per good unit produced and sold$85Profit per defective unit sold$43Cost per unit for customer returns$14Cost of warranty work$13,500Compute the following:a. Lost profits from selling defective work $Answerb. Total costs of failure $Answerc. Total quality cost $Answer

Quality costs are categorised into 4 types which are enumerated below 1. Prevention costs 2 .…

Answered: Cost of quality

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Cost of quality
Managers at Walla-Walla LTD want to determine the company’s cost of quality. The following information has been gathered from the records for August:

Defective units	9,000
Units reworked	1,800
Defective units returned	600
Appraisal costs	$26,250
Cost per unit for rework	$18
Prevention costs	$127,500
Profit per good unit produced and sold	$85
Profit per defective unit sold	$43
Cost per unit for customer returns	$14
Cost of warranty work	$13,500

Compute the following:
a. Lost profits from selling defective work $Answer
b. Total costs of failure $Answer
c. Total quality cost $Answer

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