You are given the following environmental quality-related costs: Prepare a cost-
ID: 2582925 • Letter: Y
Question
You are given the following environmental quality-related costs:
Prepare a cost-of-quality (COQ) report of environmental management for the year. Determine subtotals for each of the four reporting categories and express each subtotal as a percentage of total operating expenses ($10,000,000) for the year. (Round your percentage answers to 1 decimal place.)
Employee training $ 170,000 Product design 210,000 Supplier certification 75,000 Process inspection 355,000 Depreciation—pollution-control equipment 470,000 Maintaining pollution-control equipment 270,000 Cleaning up polluted lake 570,000 Restoring land after use 770,000 Property damage claim 670,000Explanation / Answer
Cost Of Quality Report
Category
Cost ($)
% of Total Operating Expenses
Prevention Costs:
Employee Training
170,000
Product design
210,000
Total Prevention Costs
380,000
0.0%
Appraisal Costs:
Supplier Certification
75,000
Process Inspection
355,000
Depreciation- Pollution control Equipment
470,000
Maintainig Pollution-control Equipment
270,000
Total Appraisal Costs
1,170,000
0.1%
Internal Failure Costs:
Cleaning Up Polluted Lake
570,000
Total Internal Failure Costs
570,000
0.1%
External Failure Costs
Restoring Land after use
770,000
Property Damage Claim
670,000
Total External Failure Costs
1,440,000
0.1%
Total Cost of Quality
3,560,000
0.3%
Note: In given question it is said that Percentage should be rounded of to 1 decimal, total cost of quality comes to 0.3%. if next number is 5 or above, it is rounded off by adding 1 to before decimal (except to total cost of quality because of adding problem of all above percentages).
Category
Cost ($)
% of Total Operating Expenses
Prevention Costs:
Employee Training
170,000
Product design
210,000
Total Prevention Costs
380,000
0.0%
Appraisal Costs:
Supplier Certification
75,000
Process Inspection
355,000
Depreciation- Pollution control Equipment
470,000
Maintainig Pollution-control Equipment
270,000
Total Appraisal Costs
1,170,000
0.1%
Internal Failure Costs:
Cleaning Up Polluted Lake
570,000
Total Internal Failure Costs
570,000
0.1%
External Failure Costs
Restoring Land after use
770,000
Property Damage Claim
670,000
Total External Failure Costs
1,440,000
0.1%
Total Cost of Quality
3,560,000
0.3%
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