The following table lists all costs of quality incurred by Sam’s Surf Shop last year. What was Sam’s appraisal cost for quality last year?Annual inspection costs $ 155,000Annual cost of scrap materials 286,000Annual rework cost 34,679Annual cost of quality training 456,000Annual warranty cost 1,546,000Annual testing cost 543,000

The following table lists all costs of quality incurred by Sam’s Surf Shop last year. What was Sam’s appraisal cost for quality last year?Annual inspection costs $ 155,000Annual cost of scrap materials 286,000Annual rework cost 34,679Annual cost of quality training 456,000Annual warranty cost 1,546,000Annual testing cost 543,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter14: Quality And Environmental Cost Management

Section: Chapter Questions

Problem 27E: Using the Taguchi quality loss function, an average loss of 20 per unit is calculated. During the...

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The following environmental cost reports for 20x3, 20x4, and 20x5 (year end December 31) are for the Communications Products Division of Kartel, a telecommunications company. In 2011, Kartel committed itself to a continuous environmental improvement program, which was implemented throughout the company. At the beginning of 20x5, Kartel began a new program of recycling nonhazardous scrap. The effort produced recycling income totaling 25,000. The marketing vice president and the environmental manager estimated that sales revenue had increased by 200,000 per year since 20x3 because of an improved public image relative to environmental performance. The companys Finance Department also estimated that Kartel saved 80,000 in 20x5 because of reduced finance and insurance costs, all attributable to improved environmental performance. All reductions in environmental costs from 20x3 to 20x5 are attributable to improvement efforts. Furthermore, any reductions represent ongoing savings. Required: 1. Prepare an environmental financial statement for 20x5 (for the Products Division). In the cost section, classify environmental costs by category (prevention, detection, etc.). 2. Evaluate the changes in environmental performance.
Nabors Company had actual quality costs for the year ended June 30, 20x5, as given below. At the zero-defect state, Nabors expects to spend 375,000 on quality engineering, 75,000 on vendor certification, and 50,000 on packaging inspection. Assume sales to be 25,000,000. Required: 1. Prepare a long-range performance report for 20x5. What does this report tell the management of Nabors? 2. Explain why quality costs still are present for the zero-defect state. 3. What if Nabors achieves the zero-defect state reflected in the report? What are some of the implications of this achievement?
Lloyd Industries manufactures electrical equipment from specifications received from customers. Job X10 was for 1,000 motors to be used in a specially designed electrical complex. The followingcosts were determined for each motor: At final inspection, Lloyd discovered that 33 motors did not meet the exacting specifications established by the customer. Anexamination indicated that 18 motors were beyond repair andshould be sold as spoiled goods for 75 each. The remaining15 motors, though defective, could be reconditioned as first-qualityunits by the addition of 1,650 for materials, 1,500 for labor, and1,200 for factory overhead. Required: Prepare the journal entries to record the following: 1. The scrapping of the 18 motors, with the income from spoiledgoods treated as a reduction in the manufacturing cost of thespecific job. 2. The correction of the 15 defective motors, with the additionalcost charged to the specific job. 3. The additional cost of replacing the 18 spoiled motors with newmotors. 4. The sale of the spoiled motors for 75 each. 5. If the reconditioned motors sell for 400 each, is Lloyd betteroff reconditioning the defective motors or selling them as isfor 75 as spoiled goods?
Hicks Contracting collects and analyzes cost data in order to track the cost of installing decks on new home construction jobs. The following are some of the costs that they incur. Classify these costs as fixed or variable costs and as product or period costs. Lumber used to construct decks ($12.00 per square foot) Carpenter labor used to construct decks ($10 per hour) Construction supervisor salary ($45,000 per year) Depreciation on tools and equipment ($6,000 per year) Selling and administrative expenses ($35,000 per year) Rent on corporate office space ($34,000 per year) Nails, glue, and other materials required to construct deck (varies per job)
Using the Taguchi quality loss function, an average loss of 20 per unit is calculated. During the year, 25,000 units were produced. Which of the following statements represents the correct application of the Taguchi loss function? a. The hidden costs of internal failure are 500,000. b. The hidden costs of external failure are 500,000. c. The costs of detection activities are 20 per unit inspected. d. The total external costs are 500,000.
Brody Company makes industrial cleaning solvents. Various chemicals, detergent, and water are mixed together and then bottled in 10-gallon drums. Brody provided the following information for last year: Last year, Brody completed 100,000 units. Sales revenue equaled 1,200,000, and Brody paid a sales commission of 5 percent of sales. Required: 1. Calculate the direct materials used in production for last year. 2. Calculate total prime cost. 3. Calculate total conversion cost. 4. Prepare a cost of goods manufactured statement for last year. Calculate the unit product cost. 5. Prepare a cost of goods sold statement for last year. 6. Prepare an income statement for last year. Show the percentage of sales that each line item represents.
One of the tennis rackets that Ace Sporting Goods manufactures is a titanium model (Slam) that sells for 149. The cost of each Slam consists of: Job 100 produced 100 Slams, of which six were spoiled and classified as seconds. Seconds are sold to discount stores for 50 each. Required: 1. Under the assumption that the loss from spoilage will be distributed to all jobs produced during the current period, use general journal entries to (a) record the costs of production, (b) put spoiled goods into inventory, and (c) record the cash sale of spoiled units. 2. Under the assumption that the loss due to spoilage will be charged to Job 100, use general journal entries to (a) record the costs of production, (b) put spoiled goods into inventory, and (c) record the cash sale of spoiled units.
Charles Berkle is the manager of Nogain Manufacturing and is interested in doing a cost of quality analysis. The following cost and revenue data are available for the most recent year ended December 31. Sales revenue $ 250,000 Cost of goods sold 140,000 Warranty expense 20,000 Inspection costs 14,000 Scrap and rework 7,800 Product returns due to defects 6,000 Depreciation expense 10,000 Machine maintenance expense 2,700 Wage expense 35,000 Machine breakdown costs 4,000 Estimated lost sales due to poor quality 5,000 a. Classify each of these costs into the four quality cost categories and prepare a cost of quality report for Nogain. b. What percentage of sales revenue is being spent on prevention and appraisal activities? c. What percentage of sales revenue is being spent on internal and external failure costs?
At the beginning of the year, Kowalski Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years: Preceding Year Current Year Sales $3,000,000 $3,000,000 Quality training 3,000 4,500 Material inspections 7,500 12,000 Scrap 60,000 45,000 Rework 120,000 75,000 Product inspection 15,000 30,000 Product warranty 105,000 82,500 If quality costs had been reduced to 2.5 percent of sales in the current year, profits would have increased by a.$174,000. b.$91,500. c.$37,500. d.$255,000.
SHERA Corporation incurred the following quality costs for the year ended 2024: Cost of quality training $10,569 Cost of rework labor and overhead $14,498 Cost of field servicing $12,905 Cost of recalled product $10,209 Downtime due to rework $10,018 Product testing $11,289 Inspection of goods $13,920 Warranty replacements $14,348 Quality engineering $12,244 Determine the total prevention cost.
Prior to installing a JIT system, Clarendon Company used machine hours to assign maintenance costs to its three products of 6-inch, 8-inch, and 11-inch insulation. The maintenance costs totaled $400,000 per year. The machine hours used by each product and the quantity produced of each product are as follows: Machine Hours Quantity Produced 6-inch 12,000 31,250 rolls 8-inch 20,000 25,000 rolls 11-inch 18,000 12,000 rolls After installing JIT, three manufacturing cells were created and the cell workers were trained to perform maintenance. Maintenance costs for the three cells still totaled $400,000; however, these costs are now traceable to each cell. Cell, 6-inch $100,000 Cell, 8-inch 120,000 Cell, 11-inch 180,000 After installing JIT, the maintenance cost per roll of 6-inch insulation would be
At the beginning of the year, Devonshire Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years: Preceding Year Current Year Sales $2,400,000 $2,400,000 Quality training 30,000 48,000 Material inspections 7,000 8,000 Scrap 48,000 30,000 Rework 60,000 48,000 Product inspection 10,000 12,000 Product warranty 36,000 24,000 For the current year, appraisal costs are what percentage of sales? a.0.500% b.0.333% c.3.333% d.0.833%