Gadsen Company's quality cost report is to be based on the following data: Maintenance of test equipment$38,000Quality training$40,000Product recalls$89,000Quality circles$29,000Rework labor and overhead$34,000Liability arising from defective products$16,000Supervision of testing and inspection activities$50,000Re-entering data because of keying errors$50,000Supplies used in testing and inspection$36,000? 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 | $ | 29,000 |
| Quality training | 40,000 | |
| Total prevention cost | 69,000 | |
| Appraisal costs | ||
| Maintenance of test equipment | 38,000 | |
| Supervision of testing and inspection activities | 50,000 | |
| Supplies used in testing and inspection | 36,000 | |
| Total appraisal cost | 124,000 | |
| Internal failure costs | ||
| Re-entering data because of keying errors | 50,000 | |
| Rework labor and overhead | 34,000 | |
| Total internal failure cost | 84,000 | |
| External failure costs | ||
| Liability arising from defective products | 16,000 | |
| Product recalls | 89,000 | |
| Total external failure cost | 105,000 | |
| Total quality cost | $ | 382,000 |
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