Harwood Company's quality cost report is to be based on the following data: Depreciation of test equipment$94,000Quality circles$54,000Product recalls$20,000Test and inspection of incoming materials$82,000Debugging software errors$11,000Rework labor and overhead$48,000Technical support provided to suppliers$12,000Net cost of scrap$29,000Lost sales due to poor quality$74,000? Required:?Prepare a Quality Cost Report in good form with separate sections for prevention costs, appraisal costs, internal failure costs, and external failure costs.
What will be an ideal response?
| Prevention costs | ||
| Quality circles | $ | 54,000 |
| Technical support provided to suppliers | 12,000 | |
| Total prevention cost | 66,000 | |
| Appraisal costs | ||
| Test and inspection of incoming materials | 82,000 | |
| Depreciation of test equipment | 94,000 | |
| Total appraisal cost | 176,000 | |
| Internal failure costs | ||
| Debugging software errors | 11,000 | |
| Net cost of scrap | 29,000 | |
| Rework labor and overhead | 48,000 | |
| Total internal failure cost | 88,000 | |
| External failure costs | ||
| Product recalls | 20,000 | |
| Lost sales due to poor quality | 74,000 | |
| Total external failure cost | 94,000 | |
| Total quality cost | $ | 424,000 |
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