Question

Quality Cost Report

Evans Company had total sales of $3,600,000 for fiscal 20x5. The costs of quality-related activities are given below.

Returns/allowances	$216,000
Design changes	162,000
Prototype inspection	14,400
Downtime	270,000
Quality circles	10,800
Packaging inspection	7,200
Field testing	14,400
Complaint adjustment	216,000

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:
	$
		$	%
Appraisal costs:
	$
Internal failure costs:
	$
External failure costs:
	$
Total quality costs		$	%

Answer 1

PREVENTIVE COSTS:

CATEGORY	QUALITY COST $
Quality circles	10800
Prototype Inspection	14400
TOTAL PREVENTIVE COSTS	$25200

APPRAISAL COSTS:

CATEGORY	QUALITY COST $
Field Testing	14400
Packaging Inspection	7200
TOTAL APPRAISAL COST	$21600

INTERNAL FAILURE COSTS:

CATEGORY	QUALITY COST $
Design changes	162000
Downtime	270000
TOTAL INTERNAL FAILURE COSTS	$432000

EXTERNAL FAILURE COSTS:

CATEGORY	QUALITY COST $
Returns/allowances	216000
Compliant adjustment	216000
TOTAL EXTERNAL FAILURE COST	$432000

EVANS COMPANY'S QUALITY COST REPORT

FOR THE YEAR ENDED 20X5

CATEGORY	QUALITY COST	% OF SALES
Preventive costs	$25200	0.7
Appraisal costs	$21600	0.6
Internal failure costs	$432000	12
External failure costs	$432000	12
TOTAL	$910800	25.3

All the best....