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(Answered)-Robbie of Steam Inc has been concerned about the growth in costs


Robbie of Steam Inc has been concerned about the growth in costs over the last several years.? Robbie asked the controller to perform an activity analysis to gain a better insight into these costs.? The activity analysis revealed the following:

?

????????????Activity????????????????????????????????????????????????????????????????????????????????????Activity Cost???

Correcting invoice errors (invoices have been printed-not?mailed)??????$15,000

Disposing of scrap?(defective units) ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ??? 39,000

Shipping late production with Federal Express (at company?s cost)? ???33,000

Final inspection? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?20,000

Inspecting work in?process??????????????????????????????????????????? ? ? ? ? ? ? ? ? ? ? ? ???30,000

Preventative machine maintenance? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? 18,000

Responding to customer quality?complaints??????????????????????????????????????????18,000

????????????Total????????????????????????????????????????????????????????????????????????????????????????$173,000

?Using this information prepare a cost of quality report (as suggested by the template below).? Assume sales for the period were $700,000.

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Quality Cost Classification

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Quality Cost

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Percent of Total quality cost

?

Percent of total Sales

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?

?

?

?

?

?

?

?

?

?

?

?

?

?

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Total

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?

?

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Quality Cost

 

Quality Cost

 

Percent of Total quality cost

 

Classification

 

Prevention

 

$18,000

 

9.8%

 

Appraisal

 

$50,000

 

3.3%

 

Internal Failure

 

$54,000

 

3.3%

 

External Failure

 

$51,000

 

3.5%

 

Total

 

$173,000...

 


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