Backwoods American, Inc., produces expensive water repellent, down-lined parkas. The company implemented a total quality-management program in 2005. Following are quality-related accounting data that have been accumulated for the five-year period after the program€™s start.
Backwoods American, Inc., produces expensive water repellent, do
a. Compute the company€™s total failure costs as a percentage of total quality costs for each of the five years. Does there appear to be a trend to this result? If so, speculate on what might have caused the trend.
b. Compute prevention costs and appraisal costs, each as a percentage of total costs, during each of the five years. Speculate on what the company€™s quality strategy appears to be.
c. Compute quality-sales indices and quality-cost indices for each of the five years. Is it possible to assess the effectiveness of the company€™s quality-management program from these index values?
d. List several examples of each quality-related cost€”that is, prevention, appraisal, and internal and external failure€” that might result from the production of parkas.