- 5 Marks
MA – Aug 2022 – L2 – Q4b – Other aspects of performance measurement
This question discusses the relationship between conformance and non-conformance costs using data from Mante Ltd.
Question
Mante Ltd is reviewing its progress toward meeting its objective of having a reputation for producing high-quality products. Extracts from the company’s records for each of the years ended 31 October 2020 and 2021 are shown below.
| Description | 2021 | 2020 |
|---|---|---|
| % of units rejected by customers | 15% | 21% |
| % of units rejected before delivery | 15% | 5% |
| Cost as % of revenue: | ||
| Raw material inspection | 10% | 3% |
| Training | 7% | 4% |
| Preventive machine maintenance | 8% | 2% |
| Machine breakdown maintenance | 4% | 11% |
| Finished goods inspection | 8% | 2% |
Required:
Discuss, using the above data, the relationship between conformance costs and non-conformance costs and its importance to Mante Ltd.
Find Related Questions by Tags, levels, etc.
Report an error