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Acme Ltd Case Study Assignment Help Example Acme Ltd Case Study Assignment Help Example Acme Ltd Case Study Writing Service Example Cost of Quality COQ system is used to provide the information to the management that by reducing the cost of quality, management can grab the opportunity to increase profits without raising sales or cost (Samwer, 2010). It also provides the standard for measurement of quality improvement. An increase or decrease in total cost of quality does not tell the whole picture of progress or decline of company. If sales increases than it is expected that quality cost also will be increased in a fix perportion. Therefore, it should be represented as a percentage of sales in particular year. It provides real picture of actual trends in quality costs (Baik, 2005). Presentation of quality cost as a percentage of sales may be affected in case of price fluctuations. In this condition, quality cost should be represented as the percentage of total manufacturing costs. So, a company measures COQ both as a percentage of sales and total cost. A price change can distort the information in COQ, when it is calculated on the basis of sales. COQ as a percentage of total cost is unaffected by a price change but affected by an increase in production costs (Wood, 2007). In case of Acme Ltd., there is a increase in quality costs in manufacturing devision. The general manager of this company is certain that this is an unreasonable increase in quality costs. She should represent this increased figure of quality cost as the percentage of sales or costs. This is the best way to present COQ figures at the meeting to show the real picture.

Category Last Year This Year
Sales (in $) 25000000 30000000
COGS (in $) 21250000 25500000
S, G &A (in $) 2000000 2400000
Total Cost (in $) 23250000 27900000
Net Profit (in $) 1750000 2100000
COQ (in $) 3187500 3825000
COQ/ sales (in %) 12.75 12.75
COQ/Total Cost (in%) 13.71 12.75

On the basis of above observation, COQ is calculated on the basis of both sales and costs. COQ as the percentage of sales is the same 12.75% in both years. If COQ is measured as percentage of total cost than it decreases from 13.71% to 12.75%. So, the general manager should present this figure as percentage of total cost because this does not show any increase in COQ. This presentation will give positive impact on her boss and other representatives in P&L meeting.

References Baik, D. (2005). Systems modeling and simulation: theory and applications. UK: Springer. Samwer, J. (2010). The Cost of Quality Uncertainty: Empirical Insights into ‘The Market for Lemons’. Germany: GRIN Verlag. Wood, D. C. (2007). The Executive Guide to Understanding and Implementing Quality Cost Programs: Reduce Operating Expenses and Increase Revenue. USA: ASQ Quality Press Get Case Study Writing Service of all topics with You can also check our youtube video that how we can get case study assignment help We ensure you that you will get complete and original case study assignment help of all topics from our experienced experts. You can contact us at USA/Canada Toll Free Phone001-877-839-9989 Australia Phone Number+61-3-9088-1335 E-mail: