Problems:

1. Classify the following quality costs:

• Costs	Amount
  Product Recall Cost Rework Rejected Outgoing Lot Freight for Rejected Goods from Customer TQM Training Class for Operators Quality Engineer’s salary In-process Inspection Down-time Due to Rejected Parts Quality Audit of Supplier	$10,500 2,500 450 3,000 12,000 5,600 4,500 1,500

Report the total quality costs by category.

2. If sales for the period are $1,400,000, Calculate the quality costs in Problem 1 as a percentage of sales. What conclusions can be drawn? What are the advantages and disadvantages of reporting quality costs as a percentage of sales?

3. If total costs of production are 1,000,000, calculate the quality costs in Problem 1 as a percentage of total costs. What conclusions can be drawn? What are the advantages and disadvantages of reporting quality costs as a percentage of total costs?

Above questions are from “Essentials of Quality” Chapter 12 Quality Costs written by Victor E. Sower, ISBN 9780470509593