Prepare a quality cost report for wallace communications ltd

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Reference no: EM13491922

-Wallace Communications Ltd produces paints and primers in its factory.In recent years, the company's market share has been eroded by stiff competition from overseas. Two years ago, the company's CEO decided to devote more resources to improving product quality. He set up a task force from various areas of the factory, including: production, customer services, sales, and accounting.

 

            Cost Item

Year 1

Year 2

Machine maintenance.................. 

$ 215,000

$160,000

Final testing  ..............................

   160,000

94,000

Warranty repairs........................      

69,000

23,000

Customer returns    

   262,000

 80,000

Incoming inspection           

45,000

22,000

Training suppliers   

5,000

15,000

Scrap 

     68,000

   40,000

Rework         

120,000

62,000

Design reviews       

     20,000

95,000

Total Quality Cost

$964,000

$591,000

 

Total production costs for year 1 was $4,120,000 and for year 2 was $4,510,000.

Required:

(a)  Prepare a Quality Cost Report for Wallace Communications Ltd.

(b)  By analysing the quality cost report you prepared above, determine if the company's quality improvement programme has been successful.

(c)  There are different views of how quality can be managed. While a certain level of quality may be accepted, there is an argument to aim for the highest level of quality. Discuss these two views of "quality as cost" and "quality as value".

Reference no: EM13491922

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