The Hormosa Company Classifies Its Overall Cost of Quality (COQ)

Essay

The Hormosa Company classifies its overall Cost of Quality (COQ) into four categories. COQ components, as a percentage of cost of goods sold for the last three years, are as follows: $\begin{array}{lrrr}\text { COQ Component } & 2019 & 2020 & 2021 \\\text { (1) Prevention costs } & 2.00 \% & 4.00 \% & 1.00 \%\\\text { (2)Appraisal costs } & 1.50 \% & 2.50 \% & 3.00 \% \\\text { (3)Internal failure costs } & 14.50 \% & 24.00 \% & 26.00 \% \\\text { (4)External failure costs } & 12.00 \% & 19.50 \% & 30.00 \%\end{array}$ Required:
1. Prepare a histogram that shows the COQ trends for each of the four components of COQ as well as total COQ over the period 2019 through 2021. Note: Index numbers (1) through (4) may be used in place of a description key. For example, in labeling your histogram you can use "1" to refer to "Prevention Costs," etc.
2. Of what interpretive or managerial value is the histogram you prepared, both in a general sense and as it relates to the data set at hand?