CIS Company has the following information available:
Quality engineering of products $20,000
Technical support provided by CIS to suppliers $2,000
Cost of field servicing $80,000
Supervision of testing activities $30,000
Net cost of spoilage $55,000
Depreciation of testing equipment $4,500
Plant utilities in inspection area $100,000
Retesting of reworked products $200,000
Lost sales arising from a reputation for poor quality products $1,000,000
Reinspection of reworked products $44,000
Warranty replacements $3,000
Returns and allowances given to customers due to quality issues $5,500
Rework labor and overhead $70,000
Required:
Prepare the quality cost report for CIS Company.
Prevention Costs
Quality engineering of products $20,000
Technical support provided by CIS to suppliers $2,000
$22,000
Appraisal Costs
Supervision of testing activities $30,000
Depreciation of testing equipment $4,500
Plant utilities in inspection area $100,000
$134,500
Internal Failure Costs
Retesting of reworked products $200,000
Reinspection of reworked products $44,000
Net cost of spoilage $55,000
Rework labor and overhead $70,000
$369,000
External Failure Costs
Lost sales arising from a reputation for poor quality products $1,000,000
Warranty replacements 3,000
Returns and allowances given to customers due to quality issues 5,500
Cost of field servicing 80,000
$1,088,500
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