Question - Ross Co. implemented a quality improvement program and tracked the following for the five years:
Quality cost Actual Sales Costs as a percentage of sales
2009 500,000 2,000,000 25%
2010 495,000 2,200,000 22.50
2011 450,000 2,400,000 18.75
2012 434,000 2,480,000 17.50
2013 400,000 3,200,000 12.50
By cost category as a percentage of sales for the same period of time:
Prevention Appraisal Internal Fail External Failure
2009 2.50% 2.50% 7.50% 12.50%
2010 3.75 3.00 5.00 10.75
2011 3.75 3.75 3.75 7.50
2012 5.00 3.75 3.13 5.63
2013 6.38 3.00 2.50 1.90
1. Prepare a bar graph that reveals the trend in quality cost as a percentage of sales (time on the horizontal axis and percentages on the vertical) Comment on the message of the graph.
2. Prepare a bar graph for each cost category as a percentage of sales. What does the graph tell you?
3. What if management would like to have the trend in relative distribution of quality costs? Express this as a bar graph and comment on its significance.