The Cost of Quality Report is as follows:
Quality Cost Quality Percentage of Percentage of
Classification Cost Quality Cost Total Sales
Prevention $98,600 20% ($98,600/$493,000) 3.4%
Appraisal 49,300 10% ($49,300/$493,000) 1.7%
Internal Failure 246,500 50% ($246,500/$493,000) 8.5%
External Failure 98,600 20% ($98,600/$493,000) 3.4%
Total Quality Costs $493,000 100% 17.0%
Data and Calculations:
Inspecting cleanliness of rooms $49,300 (Appraisal)
Processing lost customer reservations 98,600 (External failure)
Rework incorrectly prepared room service meal 246,500 (Internal failure)
Employee training 98,600 (Prevention)
Total $493,000
Sales $2,900,000
Percentage of Quality Cost = Quality Cost/Total Quality Cost * 100
Percentage of Total Sales = Quality Cost/Total Sales * 100
Thus, the cost of quality report is an appraisal of how the hotel uses its resources to prevent poor quality, including its internal and external failures.
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