Reference no: EM132933149
Question - Charles Berkle is the manager of Nogain Manufacturing and is interested in doing a cost of quality analysis. The following cost and revenue data are available for the most recent year ended December 31.
Sales revenue $250,000
Cost of goods sold 140,000
Warranty expense 20,000
Inspection costs 13,000
Scrap and rework 7,200
Product returns due to defects 6,000
Depreciation expense 10,000
Machine maintenance expense 1,800
Wage expense 35,000
Machine breakdown costs 4,000
Estimated lost sales due to poor quality 5,000
Required -
a. Classify each of these costs into the four quality cost categories and prepare a cost of quality report for Nogain.
b. What percentage of sales revenue is being spent on prevention and appraisal activities?
c. What percentage of sales revenue is being spent on internal and external failure costs?