Gavin Company Has Asked Its Management Accountant to Prepare a Cost

Essay

Gavin Company has asked its management accountant to prepare a cost of quality report. Management is concerned that quality costs are too high relative to the company's sales. Sales in Year 1 totaled $400,000, while sales in Year 2 were $500,000.Required:
1) Prepare a Quality Cost Report for Gavin Company showing its quality costs as a percentage of sales. Organize the costs by type (prevention, appraisal, internal failure, and external failure) and include percentages for each individual cost as well as for the total of each category. Round your answers to three decimal places. The report has been started below:
2) Evaluate Gavin Company's strategy for reducing its total costs of quality.Just a ?, Why do you have Year 1 listed first and then Year 1 and then in the tables you request that they be listed as Year 2 first and then Year 1? This is a little confusing when trying to transfer numbers.Just another observation, here
I think a/c misunderstood instructions below. JMF
$$\begin{array} { | l | r | r | r | r | } \hline \text { Description of Quality Costs } & \underline { \underline { \mathbf { 2 0 1 3 } } } & { \underline { \% } } & { \underline { \mathbf { 2 0 1 4 } } } &\% \\\hline \text { Downtime } & 3,250 & 14.1 \% & 3,300 & 14.7 \% \\\hline \text { Inspection } & 4,500 & 19.5 \% & 6,100 & 27.1 \% \\\hline \text { Product design } & 1,150 & 5.0 \% & 1,440 & 6.4 \% \\\hline \text { Reliability testing } & 2,130 & 9.2 \% & 2,500 & 11.1 \% \\\hline \text { Repair and rework costs before sale } & 1,615 & 7.0 \% & 2,440 & 10.8 \% \\\hline \text { Restocking and packaging } & 3,320 & 14.4 \% & 1,420 & 6.3 \% \\\hline \text { Training } & 1,500 & 6.5 \% & 1,975 & 8.8 \% \\\hline \text { Warranty repairs and replacements } & 5,585 & 24.2 \% & 3,350 & 14.9 \% \\\hline \text { Total costs of quality } & 23,050 & 100.0 \% & 22,525 & 100.0 \% \\\hline\end{array}$$ Change "2013" to:
Year 1
Change "2014" to:
Year 2
$\begin{array}{|l|l|l|l|l|}\hline \text { Gavin Company } \\\hline \text { Quality Cost Report } \\\hline \text { Year Ended December 31, }\\\hline & 2014 & \% & 2013 & \% \\\hline \text { Prevention Costs: } & & & & \\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\end{array}$ Change "2014" to:
Year 2
Change "2013" to:
Year 1