You have been hired as a Cost Accountant by Sundial, Inc., which produces sunglasses. Your duties include developing cost standards for materials and labor, designing and implementing cost accounting systems, defining various product and operational costs, analyzing production costs and recommending changes. When the trial period is over, you will have a performance review to demonstrate the completed tasks and gained knowledge. You have read the Cost of Quality Report of Sundial, Inc. and discovered that quality costs constitute 4.2% of sales. The amount is enormous, and your boss asks you to develop a set of measures to reduce it. Sundial, Inc. Cost of Quality Report For the Year Cost of Quality Percent of Sales ($32,000,000) Prevention costs $160,000 0.5% Appraisal costs $192,000 0.6% Internal failure costs $576,000 2.8% External failure costs $416,000 1.3% Total cost of quality $1,344,000 4.2% 2) Provide at least three examples of each of the types of Quality Costs that Sundial, Inc. might have encountered.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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You have been hired as a Cost Accountant by Sundial, Inc., which produces sunglasses. Your duties include developing cost standards for materials and labor, designing and implementing cost accounting systems, defining various product and operational costs, analyzing production costs and recommending changes. When the trial period is over, you will have a performance review to demonstrate the completed tasks and gained knowledge.

You have read the Cost of Quality Report of Sundial, Inc. and discovered that quality costs constitute 4.2% of sales. The amount is enormous, and your boss asks you to develop a set of measures to reduce it.

Sundial, Inc.

Cost of Quality Report

For the Year

Cost of Quality Percent of Sales ($32,000,000)

Prevention costs $160,000 0.5%

Appraisal costs $192,000 0.6%

Internal failure costs $576,000 2.8%

External failure costs $416,000 1.3%

Total cost of quality $1,344,000 4.2%

2) Provide at least three examples of each of the types of Quality Costs that Sundial, Inc. might have encountered.

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