What type of quality cost is involved with Toyota’s Prius recall?

Toyota issued a recall in February 2014 for its hybrid Prius.  Cars that were built between 2010 and 2014 were recalled globally for a software glitch in the engine control unit (ECU). Customers need to return to the dealer to have the repairs made to fix the issue.

Questions

  1. What type of quality costs is associated with this recall of the Toyota Prius (prevention, appraisal, internal failure, or external failure)?
  2. List the costs associated with this recall what would be (relatively) easy for Toyota to quantify (assign a dollar value to).  Use your imagination.
  3. List the types of costs associated with this recall that would be difficult to quantify. Again, use your imagination.
  4. Of the costs you listed in your response to Question 2 and Question 3, which group of costs would be potentially the most devastating in terms of dollar impact?  Why?

Instructor Resources

These resources are provided to give the instructor flexibility for use of Accounting in the Headlines articles in the classroom. The blog posting itself can be assigned via a link to this site OR by distributing the student handout below.  Alternatively, the PowerPoint file below contains a bullet point overview of the article and the discussion questions.  The YouTube video link below is a narration of the blog post article (no discussion questions are included in the YouTube video; those can be assigned separately.)

  • Student handout (pdf) (word) (contains entire blog posting + discussion questions)
  • PowerPoint file (brief article overview + discussion questions)
  • YouTube video (narrated article in shareable YouTube link)

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.

About Dr. Wendy Tietz, CPA, CMA, CGMA

Dr. Wendy Tietz is a professor of accounting at Kent State University in Kent, Ohio, USA. She is also a textbook author with Pearson Prentice-Hall.

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