Versatile Electrics manufactures electrical instruments for a variety of purposes. The following coste, related to maintaining product quality, were incurred in May: Inspection of electrical components purchased from outside suppliers $24 000 Costs of rework on faulty instruments 38 000 Replacement of instruments already sold that were still covered by warranty 85 000 Costs of defective parts that cannot be salvaged 12 200 Training of quality control inspectors 10 000 Tests of instruments before sales 20 000 Required: 1. Prepare a cost of quality report similar to the report chown in Exhibit 16.11. 2. How do you think management should react to the relative size of the four categories of quality costs? think that Vor vninin

Versatile Electrics manufactures electrical instruments for a variety of purposes. The following coste, related to maintaining product quality, were incurred in May: Inspection of electrical components purchased from outside suppliers $24 000 Costs of rework on faulty instruments 38 000 Replacement of instruments already sold that were still covered by warranty 85 000 Costs of defective parts that cannot be salvaged 12 200 Training of quality control inspectors 10 000 Tests of instruments before sales 20 000 Required: 1. Prepare a cost of quality report similar to the report chown in Exhibit 16.11. 2. How do you think management should react to the relative size of the four categories of quality costs? think that Vor vninin

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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Question

E16.33
Cost of quality report: manufacturer LO 16.8 9
Versatile Electrics manufactures electrical inctruments for a variety of purposes. The following costs, related to
maintaining product quality, were incurred in May:
Inspection of electrical components purchased from outside suppliers
$24 000
Costs of rework on faulty instruments
38 000
Replacement of instruments already sold that were still covered by warranty
85 000
Costs of defective parts that cannot be salvaged
12 200
Training of quality control inspectors
10 000
Tests of instruments before sales
20 000
Required:
1. Prepare a cost of quality report similar to the report shown in Exhibit 16.112.
2. How do you think management should react to the relative size of the four categories of quality costs?
3. Do you think that Versatile Electrics has identified all of its external failure coste? Explain.

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