Memo: Understanding the Telecommunications Revolution

Appraisal costs can be defined as “The cost of activities designed to ensure quality or uncover defects” (Stevenson, 2008, p.421) Trade-offs of these appraisal costs are internal costs that are incurred when we stop production of a product to check for defects in production process, material, or

These costs are associated with the process of checking for faults that may have slipped through despite the prevention measures. Products are made by human and humans make errors. Even when a product production is made efficient and every precaution is made, some products still are defective. An appraisal process is needed before sending products to the public. Appraisal costs include the cost of running tests on products, labs, audits for quality, inspection of the materials used to make the products, field testing and more. As an example, many companies conduct research studies on new products. A small group of consumers from various walks of life are gathered and asked to use and give feedback on the product. Usually those consumers are compensated monetarily. Any defects in the design or problems with using the product can be reported. Other examples include hiring scientists to test product in a lab before it is sold on the market. Costs associated with appraisal can keep companies from having failure costs. A trade off associated with this type of cost can also lead to decreased time on the market. Opening up review and analysis to committee and decrease a products time on the shelf. Another trade off might be the costs associated with too many appraisals in order to find the perfect product. Analysis can be expensive, so it is important to know when the search for the perfect has become the enemy of the good.

The first type of cost is Prevention costs. Prevention refers to all costs associated with preventing the failure or non-conforming product or service

* Tests done are questioning management about procedures for determining uncollectible amounts and reviewing amounts

When the quality throughput of the component is less than 95%, the demand is increased. Quality measures are in place to alert the supplier when the throughput is less than 95% as desired but additional demands with reduced quality requirements keep the supplier from delivering. Original plans called for specific manufactured items for each component yet the supplier elected to use a less expensive alternative which isn’t meeting quality requirements.

We can also see appraisal costs benefits when looking at the QA department and how they monitor the raw materials entering our plant. Every time they prevent poor quality material from making it into our production environment, this is our way of making sure that our clients are receiving the best materials we have to offer. Although there is a cost there for that department, the gains we see from increased sales and customer satisfaction can be partially attributed to them.

As an employee within this company, this memo will address the various types of costs when quality considerations are made within the company, explanations for these types of costs, and three types of costs and how they are portrayed when used with trade-offs within manufacturing the product or service.

Excess/ obsolescence costs (including cost of inventory adjustments, end-of-life write-offs, scrap, material obsolescence and obsolete product rebate programs)

If you have ever opened up a phone (do not try this at home, you might

• The system also fails to compute material usage variances, which only further discredits the accuracy of the accounting cost structure. For more accurate measure of material usage, the quality assurance department must include this variance calculation in its weekly report.

Directions: Select a topic from the case studies in the text. You may choose any of the topics, except those covered in previous assignments. Examples of topics you might investigate include: using telecommunications to keep in touch with co-workers; telecommunications innovation; managing telecommunications; emerging telecommunications technologies; and so on.

Businesses – from manufacturing, merchandising and service industries alike – take careful considerations for their costing systems. Setting-up competitive prices in the market can be a result of proper costing methods. Misallocation of costs may lead to incorrect price estimates, continuous production of unprofitable products, and ineffective processing schedules. In this case study, we will discuss the costing methods Zauner Ornaments are currently using and upon conclusion, it will enable us to distinguish the advantages and disadvantages of each costing method.

The above graph suggests that volume based computation of overhead costs does not reflect the real overhead costs based on actual production per product line (computed maximum in excess over actual). On the other hand, if we follow the allocation of overhead costs based on prime costs as illustrated in Exhibit 2 of the case, we need to consider other quantitative factors: 1. No data is available to determine the amount of raw materials used in producing each of the products. While we can assume that the production of small, colored glass ornaments uses fewer raw materials (e.g. glass) than large, colored glass ornaments, the amount of glass used to produce specialty ornaments cannot be derived from the facts of the case. 2. There is also no data available to determine the number of direct labor hours consumed for producing each product type, although evidently, specialty ornaments use more direct labor hours. Based on the above considerations, we deem it inaccurate to base overhead on prime costs, a common practice in traditional costing. In addition,

3. Values Scan. Analysis is necessary to identify the deficiencies and errors that need modification.

Around the 1980’s mobile telephones started showing up for commercial use. They were analog style, cumbersome and expensive to purchase. In the 1990’s digital technology was born and mobile phones became readily available to everyone and less expensive than the previous ten years. By 1998 over 30% of the world population within the areas of Europe, Asia, and North America had mobile telephones.