Question

Employee training	$	220,000
Product design		260,000
Supplier certification		100,000
Process inspection		380,000
Depreciation—pollution-control equipment		520,000
Maintain pollution-control equipment		320,000
Clean up polluted lake		620,000
Restore land after use		820,000
Property damage claim		720,000

Required:

1. Prepare a cost-of-quality (COQ) report of environmental management for the year. Determine subtotals for each of the four reporting categories, and express each subtotal as a percentage of total operating expenses ($10,000,000) for the year. (Hint: Classify the pollution-control costs as internal failure costs, under the assumption that the process pollutes and that the pollution-control equipment used by the company controls the release of pollutants into the environment.)

Answer 1