Exercise 4 (Cost of Quality Analysis, Nonfinancial Quality Measures)The Gabriel Corporation manufactures and sells industrial grinders. Thefollowing table presents financial information pertaining to quality in 20X3and 20X4 (in thousands):20X3P10,0001102501006020X4P12,50085RevenuesLine inspectionScrapDesign engineeringCost of returned goodsProduct-testing equipmentCustomer support20024014550405030135901004040Rework costs16035Preventive equipment maintenanceProduct liability claimsIncoming materials inspectionBreakdown maintenance20020Product-testing laborTrainingWarranty repairSupplier evaluation9022045300751202005020Required:1. Classify the cost items in the table into prevention, appraisal, internalfailure, or external failure categories.2. Calculate the ratio of each COQ category to revenues in 20X3 and 20X4.Comment on the trends in costs of quality between 20X3 and 20X4.3. Give two examples of nonfinancial quality measures that GabrielCorporation could monitor as part of a total quality-control effort.

Cost function is a function that is used to show how production expense will change at different…

Required: 1. Classify the cost items in the table into prevention, appraisal, internal failure, or external failure categories. 2. Calculate the ratio of each COQ category to revenues in 20X3 and 20X4. Comment on the trends in costs of quality between 20X3 and 20X4. 3. Give two examples of nonfinancial quality measures that Gabriel Corporation could monitor as part of a total quality-control effort.

Required: 1. Classify the cost items in the table into prevention, appraisal, internal failure, or external failure categories. 2. Calculate the ratio of each COQ category to revenues in 20X3 and 20X4. Comment on the trends in costs of quality between 20X3 and 20X4. 3. Give two examples of nonfinancial quality measures that Gabriel Corporation could monitor as part of a total quality-control effort.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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