Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 27

Quality Cost Classification

Required Classify each of the following costs into one of the four quality cost (i.e., COQ) categories:

1. Materials, labor, and overhead costs of scrapped units.

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2. Engineering time spent to determine the causes of failures to meet product specification.

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3. Wages and salaries for the time spent by workers to gather quality measurements.

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4. Information systems costs expended to develop data requirements.

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5. Clerical staff expenses to coordinate training programs.

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6. Salaries for members of problem-solving teams.

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7. Payment to settle a product-liability lawsuit.

Step 1 of 2

When there is a company producing goods and services, then it is very important for the company to control the quality of products produced. High level of variation in product quality will make batch unacceptable, so it is necessary to control quality and that too with cost-effectiveness.