Cass Company has recorded the following information for the last six months of operations from its cost of quality system: Quarter 1 Quarter 2 Revenue $ 810,000 $ 970,000 Costs Warranty expense $ 16,200 $ 15,800 Machine calibration 4,800 9,360 Customer returns (defects) 23,800 20,400 Material inspection on receiving dock 10,120 7,520 Waste 20,000 16,720 Quality testing equipment 19,700 13,700 Rework 3,280 5,650 Inspection before packaging 8,600 10,900 Training on testing equipment 7,200 11,000 Required: Classify these items into prevention, appraisal, internal failure, or external failure costs. Calculate the ratio of the prevention, appraisal, internal failure, and external failure costs to sales for Quarter 1 and Quarter 2.
Cass Company has recorded the following information for the last six months of operations from its cost of quality system: Quarter 1 Quarter 2 Revenue $ 810,000 $ 970,000 Costs Warranty expense $ 16,200 $ 15,800 Machine calibration 4,800 9,360 Customer returns (defects) 23,800 20,400 Material inspection on receiving dock 10,120 7,520 Waste 20,000 16,720 Quality testing equipment 19,700 13,700 Rework 3,280 5,650 Inspection before packaging 8,600 10,900 Training on testing equipment 7,200 11,000 Required: Classify these items into prevention, appraisal, internal failure, or external failure costs. Calculate the ratio of the prevention, appraisal, internal failure, and external failure costs to sales for Quarter 1 and Quarter 2.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Cass Company has recorded the following information for the last six months of operations from its cost of quality system:
| Quarter 1 | Quarter 2 | |
|---|---|---|
| Revenue | $ 810,000 | $ 970,000 |
| Costs | ||
| Warranty expense | $ 16,200 | $ 15,800 |
| Machine calibration | 4,800 | 9,360 |
| Customer returns (defects) | 23,800 | 20,400 |
| Material inspection on receiving dock | 10,120 | 7,520 |
| Waste | 20,000 | 16,720 |
| Quality testing equipment | 19,700 | 13,700 |
| Rework | 3,280 | 5,650 |
| Inspection before packaging | 8,600 | 10,900 |
| Training on testing equipment | 7,200 | 11,000 |
Required:
- Classify these items into prevention, appraisal, internal failure, or external failure costs.
- Calculate the ratio of the prevention, appraisal, internal failure, and external failure costs to sales for Quarter 1 and Quarter 2.
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