Dustin and Steve Ltd wanted to start a quality improvement program. The following table presents financial information pertaining to quality in 2018 and 2019 in RM000. 2018 2019 RM000 RM000 Sales 100,000 100,000 Handling Customer complaints 500 400 Audit of end product (Quality audits) 800 700 Statistical Process control 300 250 Field testing and appraisal at customer site 400 400 Rework Costs 1000 800 Product liability claims 400 300 Test and Inspection of incoming material 500 300 Breakdown maintenance 400 900 Loss of sales arising from reputation of poor quality 1000 800 Product-testing labour 750 220 Quality Training 1000 800 Scrap 800 500 Quality Engineering 400 300 Cost of returned goods 3000 2000 Re-entering data because of keying 200 150 Warranty repair 800 700 Supplier reviews 300 200 Downtime due to quality problems 600 500 Systems Development 200 150 Debugging of software error 400 300 Cost of field servicing and handling complaints 500 350 Line inspection 850 700 Inspection on WIP and completed units 1000 800 Technical Support for Suppliers 150 150 Product- testing equipment 300 200 Retesting 400 300 Supervision for prevention 220 200 Product Recalls 1000 800 Supervision of testing and inspecting activities 500 600 Preventive equipment maintenance 500 400 Re-inspection of reworked products 500 450 Required: a. Prepare a quality cost report and calculate the ratio of each of the FOUR (4) categories of cost of quality for 2018 and 2019. b. Critically evaluate the importance of quality cost reporting.
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Dustin and Steve Ltd wanted to start a quality improvement program. The following table presents financial information pertaining to quality in 2018 and 2019 in RM000.
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a. |
Prepare a quality cost report and calculate the ratio of each of the FOUR (4) categories of cost of quality for 2018 and 2019. |
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Critically evaluate the importance of quality cost reporting.
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