Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher

Exercise 51

Assigning Responsibility
Wallace Manufacturing produces engine parts for auto manufacturers. Recently, one of the major auto firms rejected a load of manifolds as being defective. Wallace's purchasing department had ordered from a new supplier with a much lower price. Unfortunately, the quality was much lower as well. Now the company must produce replacement parts, and the customer will not reimburse Wallace for the original cost.
The manufacturing manager argues that the purchasing department should bear all of the cost of the additional production. The purchasing department manager says that the manufacturing department should have checked the quality of the material when it was delivered.
Required
As the plant manager, how would you assign responsibility