Question

Quality Cost Report

Evans Company had total sales of $2,100,000 for fiscal 20x5. The costs of quality-related activities are given below.

Returns/allowances	$84,000
Design changes	115,500
Prototype inspection	6,300
Downtime	105,000
Quality circles	6,300
Packaging inspection	4,200
Field testing	6,300
Complaint adjustment	157,500

Required:

1. Prepare a quality cost report, classifying costs by category and expressing each category as a percentage of sales. Round percentages to one decimal place, when rounding is required. For example, 5.78% would be entered as "5.8".

Evans Company
Quality Cost Report
For the Year Ended 20x5
	Quality Costs	Total	Percentage of Sales
Prevention costs:
Complaint adjustment Design changes/Downtime/Field testing/Quality circles Complaint adjustment/Design changes/Downtime/Field testing,Prototype inspection	$
		$	%
Appraisal costs:
Design changes/Downtime/Field testing,Prototype inspection Complaint adjustment/Design changes/Downtime/Packaging inspection/Prototype inspection	$
Internal failure costs:
Complaint adjustment/Design changes/Downtime/Packaging inspection/Prototype inspection Complaint adjustment/Design changes/Downtime/Packaging inspection/Prototype inspection	$
External failure costs:
Design changes/Downtime/Field testing/Packaging inspection/Returns-allowance Complaint adjustment/Design changes/Downtime/Packaging inspection/Prototype inspection	$
Total quality costs		$	%

Answer 1

	Quality Costs	Total	Percentage of Sales
	$	$	%
Prevention Costs
Quality Circles	6300		0.3
Field Testing	6300		0.3
		12,600	0.6
Appraisal Costs
Packaging Inspection	4200		0.2
Prototype Inspection	6300		0.3
		10,500	0.5
Internal Failure Costs
Design Changes	115,500		5.5
Downtime	105,000		5.0
		220,500	10.5
External failure costs
Returns / Allowances	84,000		4.0
Complaint Adjustment	157,500		7.5
		241,500	11.5
Total Quality Costs		485,100	28.1