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The following data is from Star Production Systems:
Activity Activity Cost
Correcting invoice errors $10,000
Disposing of poor-quality incoming materials. 15,000
Disposing of scrap 28,000
Final inspections 25,000
Responding to customer complaints 15,000
Inspecting incoming materials 17,500
Preventative machine maintenance 15,000
Warranty work 25,000
As a recent business graduate (with a special love for accounting), Star Production has asked you to analyze their activity costs and make recommendations for improvement. Using the data above, create a Cost of Quality Report and suggest activity areas that should be investigated further by the company. Assume that they are not experts in the difference between “good” costs of quality and “bad” costs of quality and you should include a distinction between the two in your report.
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