Question

1. A number of activities that are a part of a company's quality control system are listed below. Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Activities Cost a. Product testing. b. Product recalls c. Rework labor and overhead. d. Quality circles e. Downtime caused by defects f. Cost of field servicing 0 Inspection of goods h. Quality engineering Warranty repairs Statistical process control k. Net cost of scrap Depreciation of test equipment m. Returns and allowances arising from poor quality n. Disposal of defective products o Technical support to suppliers D. Systems development Warranty replacements . Field testing at customer site. s Product design

Answer 1

1) Explanation: Appraisal costs are those costs incurred at the factory to test the products manufactured to make sure that the products satisfy customers' requirements with respect to quality as well as required dimentions, etc. Prevention costs are those costs incurred to prevent defective outputs from the manufacturing process. It includes costs incurred in relation to preventive maintenance, employee training, equipment review design, suppliers evaluation, etc. Items a) Product testing b) Product recalls c) Rework labor and overhead d) Quality circles e) Downtime caused by defects f) Cost of field servicing g) Inspection of goods h) Quality engineering i) Warranty repairs j) Statistical process control k) Net cost of scrap 1) Depreciation of test equipment m) Returns and allowances arising from poor quality n) Disposal of defective products o) Technical support to suppliers p) Systems development q) Warranty replacements r) Field testing at customer site s) Product design Cost Classification Appraisal cost External failure cost Internal failure cost Prevention cost Internal failure cost External failure cost Appraisal cost Prevention cost External failure cost Prevention cost Internal failure cost Appraisal cost External failure cost Internal failure cost Prevention cost Prevention cost External failure cost Appraisal cost Prevention cost Internal failure costs are those costs incurred to rectify the faults in quality of the outputs due to mistakes done by the workers inside the processing unit. External failure costs are those costs incurred to rectify the faults in the products sold already due to compliants raised by the customers who have purchased those products or availed the services.

2a) Types of costs listed in (1) above are incurred because poor quality of conformance from occuring: Prevention cost Appraisal cost 2b) Types of costs listed in (1) above are incurred because poor quality of conformance has occuring: Internal failure cost External failure cost