Heartland Fabrication understands that the reason for its success is the repetition of producing quality, dependable products. Last year two areas of weakness were identified in the area of quality: Sheet metal distortion and bolt hole accuracy were the cause of an abnormally high amount of rework and spoilage.
One of the production supervisor’s main tasks is to determine the cause of both problems and recommend a solution. Part of this process is to evaluate the costs of quality and if additional funds are necessary to get these two areas back in the acceptable range.
As the accounting department lead, what are the types of costs you should consider in working with the production supervisor to evaluate the problem?
Explain how the four types of quality costs may play a role in this issue for Heartland.
What nonfinancial issues are at stake with this issue?
Explain the cost/benefit dilemma with regard to correcting this issue if additional funds are deemed necessary.