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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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The controller of Emery, Inc. has computed quality costs as a percentage of sales for the past 5 years (20X1 was the first year the company implemented a quality improvement program). This information is as follows:

Chapter 13, Problem 42E, The controller of Emery, Inc. has computed quality costs as a percentage of sales for the past 5

Required:

  1. 1. Prepare a trend graph for total quality costs. Comment on what the graph has to say about the success of the quality improvement program.
  2. 2. Prepare a graph that shows the trend for each quality cost category. What does the graph have to say about the success of the quality improvement program? Does this graph supply more insight than the total cost trend graph does?
  3. 3. Prepare a graph that compares the trend in relative control costs versus relative failure costs. Comment on the significance of this trend.

1.

To determine

Provide trend graph for overall quality costs.

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.

Trend graph for total quality costs:

2.

To determine

Provide a trend graph for category wise quality costs.

3.

To determine

Construct a graph showing trend in control costs in comparison with failure costs.

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