Cost-of-Quality (COQ) Report
Precision Electric Instruments manufacturers fans for mini and micro computers. As a first step to focus on quality improvements, the firm has compiled the following operating data for 2011 (in thousands):
|
Line inspection
|
$ 55
|
|
Training
|
120
|
|
Returns
|
100
|
|
Warranty repairs
|
68
|
|
Preventive equipment maintenance
|
20
|
|
Recalls
|
157
|
|
Design engineering
|
67
|
|
Scrap (net of salvage value)
|
30
|
|
Downtime
|
40
|
|
Product-testing equipment
|
88
|
|
Product liability insurance
|
20
|
|
Supplier evaluation
|
15
|
|
Rework
|
35
|
|
Inspection and testing of incoming materials
|
25
|
|
Litigation costs to defend allegation of defective products
|
240
|
Required: Prepare a cost-of-quality (COQ) report and classify the costs as prevention, appraisal, internal failure, and external failure. Express each category subtotal as a percentage of total COQ.