Problem 2B-39 Gadola Company s quality cost report... Galati Company\'s quality

Question

Problem 2B-39 Gadola Company s quality cost report... Galati Company's quality cost report is to be based on the following data Lost sales due to poor quality Test and inspection of incoming materials Rework labor and overhead Test and inspection of in-process goods Product recalls Quality data gathering, analysis, and reporting Disposal of defective products Maintenance of test equipment S 27,000 $ 96,000 S 60,000 S 34,000 51,000 S15,000 S 88,000 S 62,000 102,000 Quality engineering Required Prepare a Quality Cost Report in good form with separate sections for prevention costs, appraisal costs internal failure costs, and external failure costs

Explanation / Answer

Galati Company (All amounts in $) Quality Cost Report Prevention Costs Quality Data Gathering, Analysis and Reporting 15000 Disposal of Defective Products 88000 Total Prevention Costs 103000 Appraisal Costs Test and Inspection of Incoming Materials 96000 Test and Inspection of In-Process Goods 34000 Quality Engineering 102000 Total Appraisal Costs 232000 Internal Failure Costs Lost Sales due to poor quality 27000 Rework Labour and Overhead 60000 Total Internal Failure Costs 87000 External Failure Costs Product Recalls 51000 Total External Failure Costs 51000 Total Quality Costs 473000

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