Chapter 1.A, Problem 2E

EXERCISE 1A−2 Classification of Quality Costs LO1−7

A number of activities that are a part of a company’s quality control system are listed below:

1. Product testing.
2. Product recalls.
3. Rework labor and overhead.
4. Quality circles.
5. Downtime caused by defects.
6. Cost of field servicing.
7. Inspection of goods
8. Quality engineering.
9. Warranty repairs.
10. Statistical process control.
11. Net cost of scrap.
12. Depreciation of test equipment.
13. Returns and allowances from poor quality
14. Disposal of defective products.
15. Technical support to suppliers.
16. Systems development.
17. Warranty replacements.
18. Field testing at customer site.
19. Product design.

Required:

1. Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost.
2. Which of the four types of costs in (1) above are incurred in an effort to keep poor quality of conformance from occurring? Which of the four of costs in (1) above are incurred because poor quality of conformance has occurred?