The Bulldog Company Incurred the Following Quality-Related Costs Required:
1

question 138

Essay

The Bulldog Company incurred the following quality-related costs: $\begin{array}{lrrrr}&2019&2018\\\text { Calibration } & \$ 190,000 & \$120,000 \\\text { Product design } & 180,000 & 210,000\\\text { Product liability } & 150,000 & 90,000 \\\text { Product recalls } & 480,000 & 240,000 \\\text { Retesting } & 300,000 & 240,000 \\\text { Rework } & 390,000 & 120,000 \\\text { Testing } & 60,000 & 180,000 \\\text { Training } & 90,000 & 120,000 \\\text { Warranty repairs } & 180,000 & 90,000\end{array}$ Required:
1. Calculate for each of the two years:
● Total prevention costs
● Total appraisal costs
● Total internal failure costs
● Total external failure costs
2. Provide two recommendations for improving the disclosure of COQ data for the current data set (i.e., providing more informative disclosures).
3. Based on the data in this exercise, and your solution to Requirement 1, what observations can you offer regarding COQ spending over the two-year period?

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Definitions:

Correlation

A statistical measure indicating the degree to which two variables' movements are associated with each other, ranging from -1 (perfect negative correlation) to 1 (perfect positive correlation).

Time Diversification

An investment strategy that spreads exposure across different periods to reduce risk associated with market volatility.

Standard Deviation

Standard deviation is a statistical measure that quantifies the amount of variation or dispersion of a set of data values.

Uncertainty

The lack of certainty in the outcome of an event, often quantifiable and factored into models and decision-making processes in finance.