Gavin Company has asked its management accountant to prepare a cost of quality report.Management is concerned that quality costs are too high relative to the company's sales.Sales in Year 1 totaled $400,000,while sales in Year 2 were $500,000.
Required:
1)Prepare a Quality Cost Report for Gavin Company showing its quality costs as a percentage of sales.Organize the costs by type (prevention,appraisal,internal failure,and external failure)and include percentages for each individual cost as well as for the total of each category.Round your answers to three decimal places.The report has been started below:
2)Evaluate Gavin Company's strategy for reducing its total costs of quality.
Definitions:
Q14: Roadmaster Tires produces a variety of auto
Q19: If a company changes from a labor-intensive
Q19: What is the principal reason that direct
Q53: Which of the following is a volume-based
Q67: At the break-even point:<br>A) Sales would be
Q67: Two different costs incurred by Ruiz
Q100: The terms "cost tracing" and "cost allocation"
Q106: How can the contribution margin ratio be
Q135: To be relevant in decision making,cost or
Q147: Discuss why qualitative characteristics must be considered