EBK CORNERSTONES OF COST MANAGEMENT
3rd Edition
ISBN: 9781305147102
Author: MOWEN
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 14, Problem 1CE
1.
To determine
Prepare a quality cost report, classify costs by category, express each category as a percentage of sales and state the message provided by cost report.
2.
To determine
Prepare a bar graph and pie chart that explains each category’s contribution to total quality costs and comment on the importance of the distribution.
3.
To determine
Comment on given situation.
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Cost of Quality and Value-Added/Non-Value-Added
Reports for a Service Company
Three Rivers Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Three Rivers are identified as follows:
a. Identify the cost of quality classification for each activity and whether the activity is value-added or non-value-added.
Value-Added/
Non-Value-Added
Classification
Quality Control Activities
Billing error correction
Cable signal testing
Reinstalling service (installed incorrectly the first
time)
Repairing satellite equipment
Repairing underground cable connections to the
customer
Replacing old technology cable with higher
quality cable
Replacing old technology signal switches with
higher quality switches
Responding to customer home repair requests
Training employees
Total activity cost
Activity
Cost
$35,400
108,800
76,000
34,000
23,000
151,400
173,000
42,400
36,000
$680,000
Quality Cost
Classification
Max
Consider the following cost and pricing data of ABC Corp. on its Product X: Price: P120.00.per unit Profit Contribution: P90.00 Proposed additional Cost: P3 per unit (for quality improvement) Current Profits: P2.4 million Sales: 100,000 units.
Assuming that average variable costs are constant at all output levels, find ABC Corp.’s total cost function before the proposed change.Calculate the total cost function if the quality improvement is implemented.Calculate ABC Corp.’s break-even output before and after the change, assuming it cannot increase its price.Calculate the increase in sales that would be necessary with the quality improvement to increase profits to P2.7 million.
Chapter 14 Solutions
EBK CORNERSTONES OF COST MANAGEMENT
Ch. 14 - What is the difference between quality of design...Ch. 14 - Why are quality costs the costs of doing things...Ch. 14 - Prob. 3DQCh. 14 - Describe the Taguchi quality loss function, and...Ch. 14 - Identify and discuss the four kinds of quality...Ch. 14 - Explain why external failure costs can be more...Ch. 14 - Prob. 7DQCh. 14 - Prob. 8DQCh. 14 - Describe the three types of quality performance...Ch. 14 - Prob. 10DQ
Ch. 14 - If a firms annual sales are 200 million, what...Ch. 14 - Explain why it is important for a manager to...Ch. 14 - Prob. 13DQCh. 14 - Explain why the Accounting Department should be...Ch. 14 - Prob. 15DQCh. 14 - What is ecoefficiency?Ch. 14 - Prob. 17DQCh. 14 - Prob. 18DQCh. 14 - Prob. 19DQCh. 14 - What are the four categories of environmental...Ch. 14 - Prob. 21DQCh. 14 - What does full environmental costing mean? Full...Ch. 14 - What information is communicated by the unit...Ch. 14 - Prob. 1CECh. 14 - Prob. 2CECh. 14 - Prob. 3CECh. 14 - Prob. 4CECh. 14 - Prob. 5CECh. 14 - Pinter Company had the following environmental...Ch. 14 - Rachel Boyce, president of a company that...Ch. 14 - Quality attributes such as performance and...Ch. 14 - Stahman, Inc., estimates its hidden external...Ch. 14 - Prob. 10ECh. 14 - Abernathy, Inc., produces two different generators...Ch. 14 - Prob. 12ECh. 14 - Gagnon Company reported the following sales and...Ch. 14 - Prob. 14ECh. 14 - Javier Company has sales of 8 million and quality...Ch. 14 - Prob. 16ECh. 14 - Prob. 17ECh. 14 - Prob. 18ECh. 14 - Achieving sustainable development will likely...Ch. 14 - Classify the following environmental activities as...Ch. 14 - Prob. 21ECh. 14 - Prob. 22ECh. 14 - Coyle Pharmaceuticals produces two organic...Ch. 14 - Prob. 24ECh. 14 - Which of the following quality costs is an...Ch. 14 - Which of the following would be a hidden quality...Ch. 14 - Using the Taguchi quality loss function, an...Ch. 14 - Environmental costs are those costs incurred...Ch. 14 - Two products, Product A and Product B, are...Ch. 14 - Prob. 30PCh. 14 - Panguitch Company manufactures a component for...Ch. 14 - Gaston Company manufactures furniture. One of its...Ch. 14 - Classify the following quality costs as...Ch. 14 - Prob. 34PCh. 14 - Recently, Ulrich Company received a report from an...Ch. 14 - Prob. 36PCh. 14 - Prob. 37PCh. 14 - Prob. 38PCh. 14 - Prob. 39PCh. 14 - Prob. 40PCh. 14 - The following items are listed in an environmental...Ch. 14 - Prob. 42PCh. 14 - Prob. 43PCh. 14 - Prob. 44P
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