# exercise5.1 - AC2720 Module 5 Costing Methods Exercise 5.1...

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AC2720: Module 5 Costing Methods Exercise 5.1 Balanced Scorecard: Quality and Time 1 There are four problems in this assessment. You need to complete all the four problems. Problem 1: Costs of Quality Osborn, Inc., produces mobile phone equipment. Amanda Westerly, Osborn’s president, decided to devote more resources to the improvement of product quality after learning that her company had been ranked fourth in product quality in a 2011 survey of cell phone users. Osborn’s quality -improvement program has now been in operation for two years, and the cost report shown here has recently been issued. Answer the following questions: 1. For each period, calculate the ratio of each COQ category to revenues and to total quality costs. 2. Based on the results of Question 1, woul d you conclude that Osborn’s quality program has been successful? Prepare a short report to present your case. 3. Based on the 2011 survey, Amanda Westerly believed that Osborn had to improve product quality. In making her case to Osborn management, how would Westerly have estimated the opportunity cost of not implementing the quality-improvement program?

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AC2720: Module 5 Costing Methods Exercise 5.1 Balanced Scorecard: Quality and Time 2 Problem 2: Costs of Quality Analysis Safe Travel produces car seats for children from newborn to two years old. The company is worried because one of its competitors has recently come under public scrutiny because of product failure. Historically, Safe Travel’s only problem with its car seats was stitching in the straps. The problem can usually be detected and repaired during an internal inspection. The cost of the inspection is \$5.00 per car seat, and the repair cost is
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