Cost of Quality Report Meagher Solutions Inc. manufactures memory chips for personal computers. An activity analysis was conducted, and the following activity costs were identified with the manufacture and sale of memory chips: a. Identify the cost of quality classification for each activity. Quality Activities Activity Cost Quality Cost Classification Correct shipment errors $150,000 Disposing of scrap 95,000 Emergency equipment maintenance 125,000 Employee training 50,000 Final inspection 80,000 Inspecting incoming materials 60,000 Preventive equipment maintenance 40,000 Processing customer returns 90,000 Scrap reporting 45,000 Supplier development 15,000 Warranty claims 250,000 Total $1,000,000 b. Prepare a cost of quality report. Assume that the sales for the period were $4,000,000. If required, round percents to one decimal place. Meagher Solutions Inc. Cost of Quality Report Quality Cost Classification Quality Cost Percent of Total Quality Cost Percent of Total Sales Prevention $fill in the blank d42036041fe1fae_1 fill in the blank d42036041fe1fae_2% fill in the blank d42036041fe1fae_3% Appraisal fill in the blank d42036041fe1fae_4 fill in the blank d42036041fe1fae_5% fill in the blank d42036041fe1fae_6% Internal failure fill in the blank d42036041fe1fae_7 fill in the blank d42036041fe1fae_8% fill in the blank d42036041fe1fae_9% External failure fill in the blank d42036041fe1fae_10 fill in the blank d42036041fe1fae_11% fill in the blank d42036041fe1fae_12% Total $fill in the blank d42036041fe1fae_13 fill in the blank d42036041fe1fae_14% fill in the blank d42036041fe1fae_15% c. The category with the fewest number of quality activities is . Nearly fifty percent of the quality activity costs are . The highest single cost is warranty claims, which is a(n) . Disposing of scrap, emergency equipment maintenance, and scrap reporting are all .

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter12: Activity-based Management

Section: Chapter Questions

Problem 14E: Sanford, Inc., has developed value-added standards for four activities: purchasing parts, receiving...

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Cost of Quality Report

Meagher Solutions Inc. manufactures memory chips for personal computers. An activity analysis was conducted, and the following activity costs were identified with the manufacture and sale of memory chips:

a. Identify the cost of quality classification for each activity.

Quality Activities	Activity Cost		Quality Cost Classification
Correct shipment errors		$150,000
Disposing of scrap	95,000
Emergency equipment maintenance	125,000
Employee training	50,000
Final inspection	80,000
Inspecting incoming materials	60,000
Preventive equipment maintenance	40,000
Processing customer returns	90,000
Scrap reporting	45,000
Supplier development	15,000
Warranty claims	250,000
Total	$1,000,000

b. Prepare a cost of quality report. Assume that the sales for the period were $4,000,000. If required, round percents to one decimal place.


Meagher Solutions Inc.
Cost of Quality Report
Quality Cost Classification	Quality Cost	Percent of Total Quality Cost	Percent of Total Sales
Prevention	$fill in the blank d42036041fe1fae_1	fill in the blank d42036041fe1fae_2%	fill in the blank d42036041fe1fae_3%
Appraisal	fill in the blank d42036041fe1fae_4	fill in the blank d42036041fe1fae_5%	fill in the blank d42036041fe1fae_6%
Internal failure	fill in the blank d42036041fe1fae_7	fill in the blank d42036041fe1fae_8%	fill in the blank d42036041fe1fae_9%
External failure	fill in the blank d42036041fe1fae_10	fill in the blank d42036041fe1fae_11%	fill in the blank d42036041fe1fae_12%
Total	$fill in the blank d42036041fe1fae_13	fill in the blank d42036041fe1fae_14%	fill in the blank d42036041fe1fae_15%

c. The category with the fewest number of quality activities is . Nearly fifty percent of the quality activity costs are . The highest single cost is warranty claims, which is a(n) . Disposing of scrap, emergency equipment maintenance, and scrap reporting are all .

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