Assume you are the management accountant for the Foleo Group. James and Leon have called you and the CFO into a meeting to discuss concerns they have with the number of SliFones that are being returned by customers under warranty. They have pulled some numbers from the accounting system and elsewhere regarding not only the warranty costs, but also other expenses associated with the quality of the phones for the current year. The directors have handed you the below costs and asked you to look into why faulty SliFones are being returned by customers. Cost of Quality Quality Activity Testing phones during production processes Activity $25,000 Cost of reworking faulty phones $24,500 Quality Assurance testing before delivery of phones $11,700 Cost of replacing faulty phones returned under warranty $78,300 Cost of servicing customers' quality complaints $66,900 Cost of scrapped phones during production $11,300 Quality training for production staff $5,000 Cost of recalling SliFones with faulty batteries $174,500 Production downtime due to suppliers' poor quality components $67,500 Maintenance on production equipment $1,300 TOTAL QUALITY COSTS $466,000 (a) Prepare a Cost of Quality Report (similar to the lecture example) using the table provided below. (Hint: Classify each of the quality costs as Prevention, Appraisal, Internal or External Failure costs) (Hint: Ensure you include the percentage of total cost for each category.)
Assume you are the management accountant for the Foleo Group. James and Leon have called you and the CFO into a meeting to discuss concerns they have with the number of SliFones that are being returned by customers under warranty. They have pulled some numbers from the accounting system and elsewhere regarding not only the warranty costs, but also other expenses associated with the quality of the phones for the current year. The directors have handed you the below costs and asked you to look into why faulty SliFones are being returned by customers. Cost of Quality Quality Activity Testing phones during production processes Activity $25,000 Cost of reworking faulty phones $24,500 Quality Assurance testing before delivery of phones $11,700 Cost of replacing faulty phones returned under warranty $78,300 Cost of servicing customers' quality complaints $66,900 Cost of scrapped phones during production $11,300 Quality training for production staff $5,000 Cost of recalling SliFones with faulty batteries $174,500 Production downtime due to suppliers' poor quality components $67,500 Maintenance on production equipment $1,300 TOTAL QUALITY COSTS $466,000 (a) Prepare a Cost of Quality Report (similar to the lecture example) using the table provided below. (Hint: Classify each of the quality costs as Prevention, Appraisal, Internal or External Failure costs) (Hint: Ensure you include the percentage of total cost for each category.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Assume you are the
Transcribed Image Text:Assume you are the management accountant for the Foleo Group. James and Leon have called you and the CFO into a meeting to discuss concerns they have with the number of SliFones that are
being returned by customers under warranty. They have pulled some numbers from the accounting system and elsewhere regarding not only the warranty costs, but also other expenses associated
with the quality of the phones for the current year. The directors have handed you the below costs and asked you to look into why faulty SliFones are being returned by customers.
Cost of Quality
Quality Activity
Testing phones during production processes
Activity
$25,000
Cost of reworking faulty phones
$24,500
Quality Assurance testing before delivery of phones
$11,700
Cost of replacing faulty phones returned under warranty
$78,300
Cost of servicing customers' quality complaints
$66,900
Cost of scrapped phones during production
$11,300
Quality training for production staff
$5,000
Cost of recalling SliFones with faulty batteries
$174,500
Production downtime due to suppliers' poor quality components
$67,500
Maintenance on production equipment
$1,300
TOTAL QUALITY COSTS
$466,000
(a) Prepare a Cost of Quality Report (similar to the lecture example) using the table provided below.
(Hint: Classify each of the quality costs as Prevention, Appraisal, Internal or External Failure costs)
(Hint: Ensure you include the percentage of total cost for each category.)
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