Please do not give solution in image format Correct answer thank You Exercise 19.10EXERCISE 19.10Quality Costs and Value Chain DecisionsDust Buster's Inc. manufactures two types of small hand-operated vacuum cleaners. Dust Busters is concerned about quality issues and has compiled the following information for the past year associated with the two vacuums.Units producedWarranty work (units).Recalled units.Reworked unitsInspection hrs. (incoming materials)Inspection hrs. (completed units).Quality training hrs.....Total Activity CostsShow Transcribed TextExercise 19.10Quality Cost Per UnitFind the quality cost per unit for each product. (Round your answer to two decimal places.) Which product has higher quality costs? How might a manager use this quality information to make decisions (e.g.. about the production process orabout suppliers) related to the value chain?ActivitiesProductionWarrantyRecallsReworkIncomingCompletedHeavy Duty asa Percentageof TotalS3Regular as aPercentagePercentage ofTotalofcDust Buster's Inc.Heavy Duty Regular Activity Costs400151,000 301,0001,200 8001,6001,8001,100900600900100520280Total ActivityTotal ActivityCostsActivity Cost Activity Costto Heavy Duty to Regular$130,000120,00070,00032,000Qual.Total CostsPer UnitHint: For each row, the percentages entered for heavy duty and regular should add up to 100%.Which product has higher quality costs? How might a manager use this quality information tomake decisions (e.g., about the production process or about suppliers) related to the valuechain? Explain.50,00020,000$422,000 EXERCISE 19.10Quality Costs and Value Chain DecisionsDust Buster's Inc. manufactures two types of small hand-operated vacuum cleaners. Dust Busters is concerned about quality issues and has compiled the following information for the past year associated with the two vacuums.Units producedWarranty work (units)Recalled units.Reworked units.Inspection hrs. (incoming materials).Inspection hrs. (completed units)Quality training hrs....Total Activity CostsHeavy Duty Regular Activity Costs151,000 301,0001,2001,6001,8001,100900520800400600900100280$130,000120,00070,00032,00050,00020,000$422,000Find the quality cost per unit for each product. (Round your answer to two decimal places.) Which product has higher quality costs? How might a manager use this quality information to make decisions (e.g., about the production process orabout suppliers) related to the value chain?

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Description: Please do not give solution in image format Correct answer thank You Exercise 19.10EXERCISE 19.10Quality Costs and Value Chain DecisionsDust Buster's Inc. manufactures two types of small hand-operated vacuum cleaners. Dust Busters is concerned about

The quality cost per unit is calculated by dividing the total costs assigned by the number of units…

Business

Accounting

Dust Buster's Inc. manufactures two types of small hand-operated vacuum cleaners. Dust Busters is concerned about quality issues and has compiled the following information for the past year associated with the two vacuums. Units produced. Warranty work (units). Recalled units Reworked units. Inspection hrs. (incoming materials). Inspection hrs. (completed units). Heavy Duty Regular Activity Costs 151,000 301,000 1,200 800 400 600 900 100 1,600 1,800 1,100 900 $130,000 120,000 70,000 32,000 50,000

Dust Buster's Inc. manufactures two types of small hand-operated vacuum cleaners. Dust Busters is concerned about quality issues and has compiled the following information for the past year associated with the two vacuums. Units produced. Warranty work (units). Recalled units Reworked units. Inspection hrs. (incoming materials). Inspection hrs. (completed units). Heavy Duty Regular Activity Costs 151,000 301,000 1,200 800 400 600 900 100 1,600 1,800 1,100 900 $130,000 120,000 70,000 32,000 50,000

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11.4C: Variable costs and activity bases in decision making The owner of Dawg Prints, a printing company,...

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Using a product profitability report to guide strategic decisions The controller of Boom Box Sounds Inc. prepared the following product profitability report for management, using activity-based costing methods for allocating both the factory overhead and the marketing expenses. As such, the controller has confidence in the accuracy of this report. In addition, the controller interviewed the vice president of marketing, who indicated that the floor loudspeakers were an older product that was highly recognized in the marketplace. The ribbon loudspeakers were a new product that was recently launched. The ribbon loudspeakers are a new technology that have no competition in the marketplace, and it is hoped that they will become an important future addition to the companys product portfolio. Initial indications are that the product is well received by customers. The controller believes that the manufacturing costs for all three products are in line with expectations. Floor Loudspeakers Bookshelf Loudspeakers Ribbon Loudspeakers Totals Sales 1,500,000 1,200,000 900,000 3,600,000 Less cost of goods sold 1,050,000 720,000 810,000 2,580,000 Gross profit 450,000 480,000 90,000 1,020,000 Less marketing expenses 600,000 120,000 72,000 792,000 Income from operations (150,000) 360,000 18,000 228,000 1. Calculate the gross profit and income from operations to sales ratios for each product. 2. Write a memo using the product profitability report and the calculations in (I) to make recommendations to management with respect to strategies for the three products.
Product costing and decision analysis for a service company Pleasant Slay Medical Inc. wishes to determine its product costs. Pleasant Stay offers a variety of medical procedures (operations) that are considered its products. The overhead has been separated into three major activities. The annual estimated activity costs and activity bases follow: Activity Budgeted Activity Cost Activity Base Scheduling and admitting 432,000 Number of patients Housekeeping 4,212,000 Number of patient days Nursing 5,376,000 Weighted care unit Total costs 10,020,000 Total patient days are determined by multiplying the number of patients by the average length of stay in the hospital. A weighted care unit (wcu) is a measure of nursing effort used to care for patients. There were 192,000 weighted care units estimated for the year. In addition, Pleasant Stay estimated 6,000 patients and 27,000 patient days for the year. (The average patient is expected to have a a little more than a four-day stay in the hospital.) During a portion of the year, Pleasant Stay collected patient information for three selected procedures, as follows: Activity-Base Usage Procedure A Number of patients 280 Average length of stay 6 days Patient days 1,680 Weighted care units 1,200 Procedure B Number of patients 650 Average length of stay 5 days Patient days 3,250 Weighted care units 6,000 Procedure C Number of patients 1,200 Average length of stay 4 days Patient days 4,800 Weighted care units 24,000 Private insurance reimburses the hospital for these activities at a fixed daily rate of 406 per patient day for all three procedures. Instructions 1. Determine the activity rates. 2. Determine the activity cost for each procedure. 3. Determine the excess or deficiency of reimbursements to activity cost. 4. Interpret your results.
See Cornerstone Exercise 20.4. Fisher Company has three sequential processes: cutting, welding, and assembly. Assume that the optimal mix is Component A = 0 units per week; and Component B = 30 units per week. Demand is uniformly spread out over the five-day work week. Fisher requires a 2.5-day buffer. Required: 1. Identify the drummer, the rate of production, the time buffer, and the rope. 2. Illustrate the DBR structure of Fisher Company. 3. What if the Welding Department was allowed or encouraged to produce at capacity? What effect will this have on work-in-process inventories?
Evaluating selling and administrative cost allocations Gordon Gecco Furniture Company has two major product lines with the following characteristics: Commercial office furniture: Few large orders, little advertising support, shipments in full truckloads, and low handling complexity Home office furniture: Many small orders, large advertising support, shipments in partial truckloads, and high handling complexity The company produced the following profitability report for management: The selling and administrative expenses are allocated to the products on the basis of relative sales dollars. Evaluate the accuracy of this report and recommend an alternative approach.
Evaluating selling and administrative cost allocations Gordon Gecco Furniture Company has two major product lines with the following characteristics: Commercial office furniture: Few large orders, little advertising support, shipments in full truckloads, and low handling complexity Home office furniture: Many small orders, large advertising support, shipments in partial truckloads, and high handling complexity The company produced the following profitability report for management: The selling and administrative expenses are allocated to the products on the basis of relative sales dollars. Evaluate the accuracy of this report and recommend an alternative approach.
Variable costs and activity bases in decision making The owner of Dawg Prints, a printing company, is planning direct labor needs for the upcoming year. The owner has provided you with the following information for next year's plans: Each color on the banner must be printed one at a time. Thus, for example, a four-color banner will need to be run through the printing operation four separate times. The total production volume last year was 600 banners, as shown below. The four-color banner is a new product offering for the upcoming year. The owner believes that the expected 600-unit increase in volume from last year means that direct labor expenses should increase by 100% (600 + 600). What do you think?
Pareto chart and cost of quality report for a manufacturing company The president of Mission Inc. has been concerned about the growth in costs over the last several years. The president asked the controller to perform an activity analysis to gain a better insight into these costs. The activity analysis revealed the following: Activities Activity Cost Correcting invoke errors 7,500 Disposing of incoming materials with poor quality 15,000 Disposing of scrap 27,500 Expediting late production 22,500 Final inspection 20,000 Inspecting incoming materials 5,000 Inspecting work in process 25,000 Preventive machine maintenance 15,000 Producing product 97,500 Responding to customer quality complaints 15,000 Total 250,000 The production process is complicated by quality problems, requiring the production manager to expedite production and dispose of scrap. Instructions 1. Prepare a Pareto chart of the company activities. 2. Classify the activities into prevention, appraisal, internal failure, external failure, and not costs of quality (producing product). Classify the activities into value-added and non-value- added activities. 3. Use the activity cost information to determine the percentages of total costs that are prevention, appraisal, internal failure, external failure, and not costs of quality. 4. Determine the percentages of total costs that are value-added and non-value-added. 5. Interpret the information.
Activity-based costing and product cost distortion The management of Four Finger Appliance Company in Exercise 14 has asked you to u.sc activity-based costing instead of direct labor hours to allocate factory overhead costs to the two products. You have determined that 81,000 of factory overhead from each of the production departments can be associated with setup activity (162,000 in total). Company records indicate that blenders required 135 setups, while the toaster ovens required only 45 setups. Each product has a production volume of 7,500 units. A. Determine the three activity rates (assembly, test and pack, and setup). B. Determine the total factory overhead and factory overhead per unit allocated to each product using the activity rates in (A).
QUESTION 34 The following cost information is available for David, Ltd.: Activity Allocation Base Volume of Activity Overhead Cost Purchasing Purchase orders 25,000 $150,000 Receiving Shipments received 17,000 68,000 Machine setups Setups 3,000 190,000 Quality control Inspections 20,000 100,000 Direct materials are $15 per unit for luxury handbags and $10 per unit for deluxe handbags. There were 12,000 direct labor hours. Each of which was charged to inventory at $18 per hour. Required: Calculate the overhead rate using activity-based costing for the Receiving Activity. $4 per shipment $5 per shipment $6 per shipment $7 per shipment
Exercise 04-8 Using the plantwide overhead rate to assess prices LO P1 Way Cool produces two different models of air conditioners. The company produces the mechanical systems in its components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and round "Cost per unit and OH rate" answers to 2 decimal places.) Process Activity Overhead Cost Driver Quantity Components Changeover $ 458,500 Number of batches 750 Machining 300,400 Machine hours 7,670 Setups 228,000 Number of setups 20 $ 986,900 Finishing Welding $ 181,600 Welding hours 4,100 Inspecting 233,000 Number of inspections 760 Rework 60,500 Rework orders 160 $ 475,100…
Question No. 4: Production under Constrained Resources Glover Company makes three products in a single facility. These products have the following unit product costs:ProductABCDirect materials$35.10$51.60$58.00Direct labor22.5025.1015.90Variable manufacturing overhead2.301.701.60Fixed manufacturing overhead12.207.808.40Unit product cost$72.10$86.20$83.90Additional data concerning these products are listed below.ProductABCMixing minutes per unit1.300.800.20Selling price per unit$81.00$103.40$96.90Variable selling cost per unit$2.90$3.40$3.20Monthly demand in units310044002400The mixing machines are potentially the constraint in the production facility. A total of 7930 minutes are available per month on these machines. Direct labor is a variable cost in this company.Required : a. How many minutes of mixing machine time be required to satisfy demand for all three products?b. How much of each product should be produced to maximize net operating income?ABCOptimal productionc. Up to how much…
Question 19 Answer the following questions using the information below: Samantha's Office Supplies manufactures desk organizers in its Processing Department. Direct materials are included at the inception of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Inspection takes place as units are placed into production. After inspection, some units are spoiled due to nondetectible material defects. Spoiled units generally constitute 4% of the good units. Data provided for February 2012 are as follows: WIP, beginning inventory 2/1/2012 50,000 units Direct materials (100% complete) Conversion costs (50% complete) Started during February 164,000 units Completed and transferred out 162,000 units WIP, ending inventory 2/29/2012 30,000 units Direct materials (100% complete) Conversion costs (25% complete) Costs: WIP, beginning inventory: Direct materials $ 300,000 Conversion costs 88,000 Direct…