Question

Quality Cost Report

Evans Company had total sales of $4,500,000 for fiscal 20x5. The costs of quality-related activities are given below.

Returns/allowances	$180,000
Design changes	315,000
Prototype inspection	13,500
Downtime	247,500
Quality circles	18,000
Packaging inspection	18,000
Field testing	9,000
Complaint adjustment	292,500

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:
Quality circles	$
Design changes		$	%
Appraisal costs:
Prototype inspection	$
Packaging inspection
Internal failure costs:
Field testing	$
Downtime
External failure costs:
Returns/allowances	$
Complaint adjustment
Total quality costs		$	%

Answer 1

Solution 1:

Evans Company
Quality Cost Report
For the Year Ended 20x5
Particulars	Quality Costs	Total	Percentage of Sales
Prevention costs:
Quality circles	$18,000.00
Design changes	$315,000.00	$333,000.00	7.4%
Appraisal costs:
Prototype inspection	$13,500.00
Packaging inspection	$18,000.00	$31,500.00	0.7%
Internal failure costs:
Field testing	$9,000.00
Downtime	$247,500.00	$256,500.00	5.7%
External failure costs:
Returns/allowances	$180,000.00
Complaint adjustment	$292,500.00	$472,500.00	10.5%
Total quality costs		$1,093,500.00	24.3%