Quality Cost Report, Taguchi Loss FunctionKathy Shorts, president of Oliver Company, was concerned with the trend in sales and profitability. The company had been losing customers at an alarming rate. Furthermore, the company was barely breaking even. Investigation revealed that poor quality was at the root of the problem. At the end of 20x5, Kathy decided to begin a quality improvement program. As a first step, she identified the following costs in the accounting records as quality related: 20x5Sales (644,000 units @ $100)$64,400,000Retesting2,125,200Rework2,382,800Vendor certification901,600Consumer complaints1,545,600Warranty2,382,800Test labor1,932,000Inspection labor1,416,800Design reviews257,600Required:1. Prepare a quality cost report by quality cost category. Round percentages to one decimal place if rounding is required. For example, 5.78% would be entered as "5.8".Oliver CompanyQuality Cost ReportFor the Year Ended December 31, 20x5 Quality CostsTotal Quality CostPercentage of SalesPrevention costs: $fill in the blank fill in the blank $fill in the blank fill in the blank %Appraisal costs: $fill in the blank fill in the blank fill in the blank fill in the blank %Internal failure costs: $fill in the blank fill in the blank fill in the blank fill in the blank %External failure costs: $fill in the blank fill in the blank fill in the blank fill in the blank %Total quality costs $fill in the blank fill in the blank %

Cost of quality includes the cost incurred to maintain the quality of products. It includes…

Answered: Quality Cost Report, Taguchi Loss…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Quality Cost Report, Taguchi Loss Function

Kathy Shorts, president of Oliver Company, was concerned with the trend in sales and profitability. The company had been losing customers at an alarming rate. Furthermore, the company was barely breaking even. Investigation revealed that poor quality was at the root of the problem. At the end of 20x5, Kathy decided to begin a quality improvement program. As a first step, she identified the following costs in the accounting records as quality related:

	20x5
Sales (644,000 units @ $100)	$64,400,000
Retesting	2,125,200
Rework	2,382,800
Vendor certification	901,600
Consumer complaints	1,545,600
Warranty	2,382,800
Test labor	1,932,000
Inspection labor	1,416,800
Design reviews	257,600

Required:

1. Prepare a quality cost report by quality cost category. Round percentages to one decimal place if rounding is required. For example, 5.78% would be entered as "5.8".

Oliver Company
Quality Cost Report
For the Year Ended December 31, 20x5
	Quality Costs	Total Quality Cost	Percentage of Sales
Prevention costs:
	$fill in the blank
	fill in the blank	$fill in the blank	fill in the blank %
Appraisal costs:
	$fill in the blank
	fill in the blank	fill in the blank	fill in the blank %
Internal failure costs:
	$fill in the blank
	fill in the blank	fill in the blank	fill in the blank %
External failure costs:
	$fill in the blank
	fill in the blank	fill in the blank	fill in the blank %
Total quality costs		$fill in the blank	fill in the blank %

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