Question

The Cost of Quality, COQ, is the difference in the cost of prevention and the cost of failure. If a quality program costs $10,000 to plan and $50,000 to administer, what is the COQ of the program reduces waste by $30,000 and returns of bad products by $40,000

Answer 1

The COQ is -$10,000

Step-by-step explanation:

The COQ can be represented by the sum of two factors: Cost of Good Quality and Cost of Poor Quality.

The Cost of Good Quality (CoGQ) includes the prevention and appraisal cost and the Cost of Poor Quality (CoPQ) includes internal and external failures.

The formula of COQ is:

COQ = CoGQ + CoPQ

If

CoGQ= $10,000 + $ 50,000 = $ 60,000

and

CoPQ= -$30,000 - $ 40,000 = -$ 70,000

CoPQ values are negative because they are reductions of wate and returns of bad products

then:

COQ= $ 60,000 - $ 70,000

COQ= -$ 10,000