Cost of Quality
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Quality Cost Analysis
Management at precise Manufacturing would like to analyze quality cost associated with the manufacturing process. In year 1, precise implemented a statistical process control system. In year 2, further steps was taken in an effort to improved quality and focus on customers satisfaction . These included the addition of inspection , expansion of statistical process control to additional process steps, and further development of products through quality engineering . The benefits of the quality focus at precise are apparent, as warranty cost and customer returns declined since quality programs were implemented. However, total quality cost continue to be significant , and management is concerned that the quality focus has not reduced total cost,but has simply shift cost from one area to another.
Accordingly management would like to analyze quality cost for the past two years.Precise had sales of $18,000,000 In both 2 years and year1, and incurred the following cost related to quality control during those years
Year 2 year 1
Inspection $61,000 $30,000
Quality engineering 57,000 12,000
Quality training programs 26,000 39,000
Costumer allowances 22,000 104,000
Scrap etc 25,000 8,000
Product testing 92,000 42,000
Rework 130,000 68,000
Statistical process control 50,000 34,000
Downtime due to defects 25,000 18,000
Warranty repairs 75,000 189,000
Fields service 45,000 143,000
Testing Supplies 15,000 16,000
Required
A. Categorize the cost and compute the total cost of conformance for each year by category.
B. Evaluate the distribution of quality cost at Precise. Discuss the distribution of quality cost and any trend in cost distribution.What effect does the distribution of quality cost have on total
quality at Precise and explain your answer
C . What future trends should Precise expect if the current focus of quality programs continues?
Explain your answer.
Quality Cost Analysis
Management at precise Manufacturing would like to analyze quality cost associated with the manufacturing process. In year 1, precise implemented a statistical process control system. In year 2, further steps was taken in an effort to improved quality and focus on customers satisfaction . These included the addition of inspection , expansion of statistical process control to additional process steps, and further development of products through quality engineering . The benefits of the quality focus at precise are apparent, as warranty cost and customer returns declined since quality programs were implemented. However, total quality cost continue to be significant , and management is concerned that the quality focus has not reduced total cost,but has simply shift cost from one area to another. Accordingly management would like to analyze quality cost for the past two years.Precise had sales of $18,000,000 IN both 2 years and year1, and incurred the following cost related to quality control during those years
Year 2 year 1
Inspection $61,000 $30,000
Quality engineering 57,000 12,000
Quality training programs 26,000 39,000
Costumer allowances 22,000 104,000
Scrap etc 25,000 8,000
Product testing 92,000 42,000
Rework 130,000 68,000
Statistical process control 50,000 34,000
Downtime due to defects 25,000 18,000
Warranty repairs 75,000 189,000
Fields service 45,000 143,000
Testing Supplies 15,000 16,000
Required
A. Categorize the cost and compute the total cost of conformance for each year by category.
B. Evaluate the distribution of quality cost at Precise. Discuss the distribution of quality cost and any trend in cost distribution.What effect does the distribution of quality cost have on total
quality at Precise and explain your answer
C . What future trends should Precise expect if the current focus of quality programs continues?
Explain your answer.
Quality Cost Analysis
Management at precise Manufacturing would like to analyze quality cost associated with the manufacturing process. In year 1, precise implemented a statistical process control system. In year 2, further steps was taken in an effort to improved quality and focus on customers satisfaction . These included the addition of inspection , expansion of statistical process control to additional process steps, and further development of products through quality engineering . The benefits of the quality focus at precise are apparent, as warranty cost and customer returns declined since quality programs were implemented. However, total quality cost continue to be significant , and management is concerned that the quality focus has not reduced total cost,but has simply shift cost from one area to another.
Accordingly management would like to analyze quality cost for the past two years.Precise had sales of $18,000,000 IN both 2 years and year 1, and incurred the following cost related to quality control during those years
Year 2 year 1
Inspection $61,000 $30,000
Quality engineering 57,000 12,000
Quality training programs 26,000 39,000
Costumer allowances 22,000 104,000
Scrap etc 25,000 8,000
Product testing 92,000 42,000
Rework 130,000 68,000
Statistical process control 50,000 34,000
Downtime due to defects 25,000 18,000
Warranty repairs 75,000 189,000
Fields service 45,000 143,000
Testing Supplies 15,000 16,000
Required
A. Categorize the cost and compute the total cost of conformance for each year by category.
B. Evaluate the distribution of quality cost at Precise. Discuss the distribution of quality cost and any trend in cost distribution.What effect does the distribution of quality cost have on total
quality at Precise and explain your answer
C . What future trends should Precise expect if the current focus of quality programs continues?
Explain your answer.
Quality Cost Analysis
Management at precise Manufacturing would like to analyze quality cost associated with the manufacturing process. In year 1, precise implemented a statistical process control system. In year 2,
further steps was taken in an effort to improved quality and focus on customers satisfaction . These
included the addition of inspection , expansion of statistical process control to additional process steps,
and further development of products through quality engineering . The benefits of the quality focus at
precise are apparent, as warranty cost and customer returns declined since quality programs were implemented. However, total quality cost continue to be significant , and management is concerned that the quality focus has not reduced total cost,but has simply shift cost from one area to another.
Accordingly management would like to analyze quality cost for the past two years.Precise had sales of $18,000,000 IN both 2 years and year1, and incurred the following cost related to quality control during those years
Year 2 year 1
Inspection $61,000 $30,000
Quality engineering 57,000 12,000
Quality training programs 26,000 39,000
Costumer allowances 22,000 104,000
Scrap etc 25,000 8,000
Product testing 92,000 42,000
Rework 130,000 68,000
Statistical process control 50,000 34,000
Downtime due to defects 25,000 18,000
Warranty repairs 75,000 189,000
Fields service 45,000 143,000
Testing Supplies 15,000 16,000
Required
A. Categorize the cost and compute the total cost of conformance for each year by category.
B. Evaluate the distribution of quality cost at Precise. Discuss the distribution of quality cost and any trend in cost distribution.What effect does the distribution of quality cost have on total
quality at Precise and explain your answer
C . What future trends should Precise expect if the current focus of quality programs continues?
Explain your answer.
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