Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 42

Cost-of-Quality (COQ) Analysis; Nonfinancial Performance Measures Acme Materials Company manufactures and sells synthetic coatings that can withstand high temperatures. Its primary customers are aviation manufacturers and maintenance companies. The following table contains financial information pertaining to cost of quality (COQ) in 2016 and 2017 in thousands of dollars:
Required
1. Classify the cost items in the table into cost-of-quality (COQ) categories.

2. Calculate the ratio of each COQ category to revenues in each of the two years. (Round answers to two decimal places.)
3. Comment on the results.
4. In addition to the financial measures listed in the table, what nonfinancial measures might Acme monitor in its effort to achieve overall improvements in quality
5. Are financial or nonfinancial quality measures likely of more use to: (a) managers (b) operating personnel Why