Chapter 14, Problem 1CE

Evans Company had total sales of $3,000,000 for fiscal 20x5. The costs of quality-related activities are given below.

Required:

1. 1. Prepare a quality cost report, classifying costs by category and expressing each category as a percentage of sales. What message does the cost report provide?
2. 2. Prepare a bar graph and pie chart that illustrate each category’s contribution to total quality costs. Comment on the significance of the distribution.
3. 3. What if, five years from now, quality costs are 7.5 percent of sales, with control costs being 65 percent of the total quality costs? What would your conclusion be?