Cost-of-Quality (COQ) Reporting CVI Inc. had November sales totaling $4,200,000 andincurred the following quality-related costs:[LO 17-5]Spoiled work-in-process inventory disposal $28,000Downtime, due to quality problems 24,000Field test of new computer 74,000Support of a customer complaint department 26,000Product liability insurance 18,000Quality training 12,000Re-inspection 13,000Rework (labor and overhead) 8,000New vendor verification and facilities inspection 25,000Technical support provided to vendors 4,000Equipment inspection 20,000Test and inspection of purchased parts 32,000Warranty repairs 22,000Final PDF to printerblo17029_ch17_713-774.indd 761 02/19/18 09:10 AMChapter 17 The Management and Control of Quality 761Required1. Prepare a cost-of-quality (COQ) report for November, with appropriate classifications. For each of thefour major categories in your report, present total category cost as a percentage of total COQ for theperiod and as a percentage of sales. (Round all percentages to 2 decimal places.)2. Offer some observations regarding the data presented in your report, in terms of the process of managing and controlling quality costs.3. What are the primary limitations of COQ reports (similar to the one you prepared)?
Cost-of-Quality (COQ) Reporting CVI Inc. had November sales totaling $4,200,000 and
incurred the following quality-related costs:
[LO 17-5]
Spoiled work-in-process inventory disposal $28,000
Downtime, due to quality problems 24,000
Field test of new computer 74,000
Support of a customer complaint department 26,000
Product liability insurance 18,000
Quality training 12,000
Re-inspection 13,000
Rework (labor and overhead) 8,000
New vendor verification and facilities inspection 25,000
Technical support provided to vendors 4,000
Equipment inspection 20,000
Test and inspection of purchased parts 32,000
Warranty repairs 22,000
Final PDF to printer
blo17029_ch17_713-774.indd 761 02/19/18 09:10 AM
Chapter 17 The Management and Control of Quality 761
Required
1. Prepare a cost-of-quality (COQ) report for November, with appropriate classifications. For each of the
four major categories in your report, present total category cost as a percentage of total COQ for the
period and as a percentage of sales. (Round all percentages to 2 decimal places.)
2. Offer some observations regarding the data presented in your report, in terms of the process of managing and controlling quality costs.
3. What are the primary limitations of COQ reports (similar to the one you prepared)?
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