[Anonymous]

Can anybody help to solve the problem? According to Becker’s review, material inspecion cost should be categorized as “prevenetion cost”( BEC modle 6, page 8, 2014 version), why is it categorzied as appraisal cost as in the question below? thanks.

As part of a benchmarking process, a company’s costs of quality for the current month have been identified as

follows:

Employee training 20,000

Product recalls 8,000

Scrap 4,500

Quality inspectors 48,000

Preventive maintenance 19,500

Supplier education expense 17,500

Materials inspection expense 60,000

Processing product returns 2,500

What amount is the company’s prevention cost for the current month?

a. $175,500

b. $57,000

c. $39,500

d. $165,000

Explanation

Choices “b” is correct. The company’s prevention costs total $57,000, as computed below:

Cost

Conforming costs Nonconforming costs

Prevention Appraisal Internal External

Employee training $20,000

Product recalls $8,000

Scrap $4,500

Quality inspectors $48,000

Preventive maintenance $19,500

Supplier education expense $17,500

Materials inspection exp. $60,000

Processing product returns $2,500

Total $57,000 $108,000 $4,500 $10,500

Choices “c”, “d”, and “a” are incorrect based on the above analysis.