Versatile Electrics manufactures electrical instruments for a variety of purposes. The following coste, related to maintaining product quality, were incurred in May: Inspection of electrical components purchased from outside suppliers $24 000 Costs of rework on faulty instruments 38 000 Replacement of instruments already sold that were still covered by warranty 85 000 Costs of defective parts that cannot be salvaged 12 200 Training of quality control inspectors 10 000 Tests of instruments before sales 20 000 Required: 1. Prepare a cost of quality report similar to the report chown in Exhibit 16.11. 2. How do you think management should react to the relative size of the four categories of quality costs? think that Vor vninin

Versatile Electrics manufactures electrical instruments for a variety of purposes. The following coste, related to maintaining product quality, were incurred in May: Inspection of electrical components purchased from outside suppliers $24 000 Costs of rework on faulty instruments 38 000 Replacement of instruments already sold that were still covered by warranty 85 000 Costs of defective parts that cannot be salvaged 12 200 Training of quality control inspectors 10 000 Tests of instruments before sales 20 000 Required: 1. Prepare a cost of quality report similar to the report chown in Exhibit 16.11. 2. How do you think management should react to the relative size of the four categories of quality costs? think that Vor vninin

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter11: Strategic Cost Management

Section: Chapter Questions

Problem 22E

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CC11 Recall that Cookie Creations sells fine European mixers that it purchases from Kzinski Supply Co. Kzinski warrants the mixers to be free of defects in material and workmanship for a period of one year from the date of original purchase. If the mixer has such a defect, Kzinski will repair or replace the mixer free of charge for parts and labor. The product must be shipped prepaid to an authorized Kzinski service center. The cost to ship the mixer is paid by the consumer. The cost to return the product to the consumer is paid by Kzinski. The authorized service center is located in Boston. Because Cookie Creations values serving its customers, it pays the shipping to Boston for any mixers needing repair under Kzinski’s warranty terms. Based on past experience, Kzinski has found that approximately 10% of mixers are returned for repair or replacement. The average cost to ship a mixer to Boston is $60. The following transactions take place in 2022 and 2023. A total of 30 mixers are…
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