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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Quality Cost Report

Whitley Company had total sales of $1,000,000 for the year ending 20X1. The costs of quality are given below.

Chapter 13, Problem 21BEA, Quality Cost Report Whitley Company had total sales of 1,000,000 for the year ending 20X1. The costs

Required:

  1. 1. Prepare a quality cost report, classifying costs by category and expressing each category as a percentage of sales. What message does the cost report provide?
  2. 2. Prepare a bar graph and pie chart that illustrate each category’s contribution to total quality costs. Comment on the significance of the distribution.

1.

To determine

Construct a report categorizing quality costs and expressing them as a percentage of sales.

Explanation

Quality Cost:

Organizations are required to bear costs due to non-conformity of goods or services with the general specifications. These costs are termed as quality costs. Quality costs can be categorized into preventive costs, detective costs, internal failure costs and external failure costs.

Quality cost report:

CategoryQuality costAmount ($)Total ($)Percentage of sales (%)
Prevention costPrototype inspection13,00015,0001.5
Quality circles2,000
Detection costPackaging inspection14,00020,0002
Field testing6,00...

2.

To determine

Construct a bar graph and pie chart illustrating each category’s contribution to total quality cost.

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