Answered Essay: Whitley Company had total sales of $1,000,000 for the year ending 20X1. The costs of quality are given below.

Whitley Company had total sales of $1,000,000 for the year ending 20X1. The costs of quality are given below.

Returns/allowances $50,000
Design changes 60,000
Prototype inspection 13,000
Downtime 40,000
Quality circles 2,000
Packaging inspection 14,000
Field testing 6,000
Complaint adjustment 65,000

Required:

1. Prepare a quality cost report, classifying costs by category and expressing each category as a percentage of sales. Round your percentages to two decimal places.

Whitley Company
Quality Cost Report
For the Year Ended 20X1
Quality Costs Percentage of sales
Prevention costs:
  Quality circles $
  Prototype inspection %
Appraisal costs:
  Field testing $
  Packaging inspection
Internal failure costs:
  Design changes $
  Downtime
External failure costs:
  Returns/allowances $
  Complaint adjustment
Total quality costs $

Expert Answer

 

Answer :-   Quality cost report

Particulars Quality costs Percentage of sales
Quality circles (Prevention costs)

Prototype inspection (Prevention costs)

2000

13000

0.20 % (100 * 2000 / 1000000)

1.30 % (100 * 13000 / 1000000)

Field Testing (Appraisal costs)

Packaging inspection (Appraisal cost)

6000

14000

0.60 % (100 * 6000 / 1000000)

1.40 % (100 * 14000 / 1000000)

Design changes (Internal failure costs)

Downtime (Internal failure costs)

60000

40000

6.00 % (100 * 60000 / 1000000)

4.00 % (100 * 40000 / 1000000)

Returns / allowances (External failure cost)

Complaint adjustment (External failure costs)

50000

65000

5.00 % (100 * 50000 / 1000000)

6.50 % (100 * 65000 / 1000000)

Total quality costs 250000 25.00 %
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