The management of Boogie Company thinks that its total costs of quality can be reduced by increasing expenditures in certain key costs of quality categories. The following costs of quality have been identified by management: Cost of Quality Rework Recalls Reengineering efforts Repair Replacements Retesting Supervision Scrap Training Testing of incoming materials Inspection of work in process Downtime Product liability insurance Quality audits Continuous improvement Warranty repairs Costs P 6.000.00 15,000.00 9.000.00 12.000.00 12.000.00 5.000.00 18,000.00 9,000.00 15.000.00 7.000.00 18,000.00 10,000.00 9,000.00 5.000.00 1000.00 15,000.00 Required: 1. Classify these costs into the four costs of quality categories 2. Determine the total pesos being spent on each of the categories 3. Based on the company's expenditures by cost of quality categories, on which cost category should the company concentrate its efforts to decrease its overall costs of quality?
The management of Boogie Company thinks that its total costs of quality can be reduced by increasing expenditures in certain key costs of quality categories. The following costs of quality have been identified by management: Cost of Quality Rework Recalls Reengineering efforts Repair Replacements Retesting Supervision Scrap Training Testing of incoming materials Inspection of work in process Downtime Product liability insurance Quality audits Continuous improvement Warranty repairs Costs P 6.000.00 15,000.00 9.000.00 12.000.00 12.000.00 5.000.00 18,000.00 9,000.00 15.000.00 7.000.00 18,000.00 10,000.00 9,000.00 5.000.00 1000.00 15,000.00 Required: 1. Classify these costs into the four costs of quality categories 2. Determine the total pesos being spent on each of the categories 3. Based on the company's expenditures by cost of quality categories, on which cost category should the company concentrate its efforts to decrease its overall costs of quality?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter14: Quality And Environmental Cost Management
Section: Chapter Questions
Problem 28E: Environmental costs are those costs incurred because poor environmental quality exists or may exist....
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