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Classifying Costs of Quality Paul Miller, controller of Meta Medical, has reviewed the costs of quality records for the past years. Meta Medical provides calibration and maintenance services for sophisticated medical equipment in the Midwest. Training, testing, and service calls are major costs that seem to grow each year. Miller is trying to measure possible ways to reducing the total costs of quality as part of a review of all processes and activities within the firm. He assembled the following costs: Parts warranty, induding replacement labor 92,000 Emergency trips to service dient machines 86,000 Rental of substitute equipment to cover client downtime 43,000 Training of repair technicians (time and travel) 196,000 Inspection of finished repairs 45,000 Testing and certifications of calibration equipment 15,000 Development of client testing processes and diagnostics 31,500 Miller is aware of two contracts that were cancelled this past year because of client complaints about poor service response. These contracts totalled $60,000. Requirements: 1. Classify these costs according to prevention, appraisal, internal failure, and external failure. 2. Comment on the difficulty that Paul Miller likely has in evaluating these and other costs that might be costs of quality.

Classifying Costs of Quality Paul Miller, controller of Meta Medical, has reviewed the costs of quality records for the past years. Meta Medical provides calibration and maintenance services for sophisticated medical equipment in the Midwest. Training, testing, and service calls are major costs that seem to grow each year. Miller is trying to measure possible ways to reducing the total costs of quality as part of a review of all processes and activities within the firm. He assembled the following costs: Parts warranty, induding replacement labor 92,000 Emergency trips to service dient machines 86,000 Rental of substitute equipment to cover client downtime 43,000 Training of repair technicians (time and travel) 196,000 Inspection of finished repairs 45,000 Testing and certifications of calibration equipment 15,000 Development of client testing processes and diagnostics 31,500 Miller is aware of two contracts that were cancelled this past year because of client complaints about poor service response. These contracts totalled $60,000. Requirements: 1. Classify these costs according to prevention, appraisal, internal failure, and external failure. 2. Comment on the difficulty that Paul Miller likely has in evaluating these and other costs that might be costs of quality.

Financial And Managerial Accounting
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter18: Activity-based Costing
Section: Chapter Questions
Problem 6PA: Product costing and decision analysis for a service company Pleasant Stay Medical Inc. wishes to...
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Classifying Costs of Quality Paul Miller, controller of Meta Medical, has reviewed the costs of quality records for the past years. Meta Medical provides calibration and maintenance services for sophisticated medical equipment in the Midwest. Training, testing, and service calls are major costs that seem to grow each year. Miller is trying to measure possible ways to reducing the total costs of quality as part of a review of all processes and activities within the firm. He assembled the following costs: Parts warranty, including replacement labor 92,000 Emergency trips to service client machines 86,000 Rental of substitute equipment to cover client downtime 43,000 Training of repair technicians (time and travel) 196,000 Inspection of finished repairs 45,000 Testing and certifications of calibration equipment 15,000 Development of client testing processes and diagnostics 31,500 Miller is aware of two contracts that were cancelled this past year because of client complaints about poor service response. These contracts totalled $60,000. Requirements: 1. Classify these costs according to prevention, appraisal, internal failure, and external failure. 2. Comment on the difficulty that Paul Miller likely has in evaluating these and other costs that might be costs of quality.
Transcribed Image Text:Classifying Costs of Quality Paul Miller, controller of Meta Medical, has reviewed the costs of quality records for the past years. Meta Medical provides calibration and maintenance services for sophisticated medical equipment in the Midwest. Training, testing, and service calls are major costs that seem to grow each year. Miller is trying to measure possible ways to reducing the total costs of quality as part of a review of all processes and activities within the firm. He assembled the following costs: Parts warranty, including replacement labor 92,000 Emergency trips to service client machines 86,000 Rental of substitute equipment to cover client downtime 43,000 Training of repair technicians (time and travel) 196,000 Inspection of finished repairs 45,000 Testing and certifications of calibration equipment 15,000 Development of client testing processes and diagnostics 31,500 Miller is aware of two contracts that were cancelled this past year because of client complaints about poor service response. These contracts totalled $60,000. Requirements: 1. Classify these costs according to prevention, appraisal, internal failure, and external failure. 2. Comment on the difficulty that Paul Miller likely has in evaluating these and other costs that might be costs of quality.
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