Questions:
1. If a firm's annual sales are $200 million, what percentage of sales should be spent on quality costs? Suppose that the firm is spending 18 percent of sales on quality costs. What is the potential savings from quality improvement?
2. Explain why it is important for a manager to assess the relative distribution of quality costs among the four categories.
3. Discuss the benefits of quality cost reports that simply list the quality costs for each category.
4. Explain why the accounting department should be responsible for producing quality cost reports.
5. What is ISO 9000? Why do so many companies want this certification?