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Question : 45) The CEO of Prairie Machine Parts (OMP) concerned with

45) The CEO of Prairie Machine Parts (OMP) is concerned with the quality of its products and the

amount of resources currently spent on customer returns. The CEO would like to analyze the

costs incurred in conjunction with the quality of the product.

The following information was collected from various departments within the company:

Warranty returns$144,000

Training personnel120,000

Litigation on product liability claims2100,000

Inspecting 10% of final products6,000


Production loss due to machine breakdowns54,000

Inspection of raw materials6,000


A. Complete the Cost of Quality Report.

B. Do any additional subjective costs appear to be missing from the report?

C. What can be learned from the report?



Total Costs

of Quality

Percentage of

Total Costs

of Quality

Prevention Costs:

Personnel training

Total prevention costs

Appraisal Costs:

Inspecting raw materials

Inspecting 10% of final products

Total appraisal costs

Internal Failure Costs:


Production loss due to

machine breakdown

Total internal failure costs

External Failure Costs:

Litigation costs from product liability claims

Warranty return costs

Total external failure costs

Total costs of quality

5 (1 Ratings )

Accounting 1 Week Ago 14 Views
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