EBK HORNGREN'S COST ACCOUNTING
16th Edition
ISBN: 9780134475950
Author: Datar
Publisher: PEARSON CO
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Textbook Question
Chapter 19, Problem 19.19E
Costs of quality analysis. Adirondack Company makes chairs for outside living spaces. The company has been working on improving quality over the last year and wants to evaluate how well it has done on costs-of-quality (COQ) measures. Here are the results;
Annual COQ Report, Adirondack Company
| 2016 | 2017 | |
| Supplier evaluation | $ 5,000 | $ 5,500 |
| Scrap | $ 7,500 | $ 5,900 |
| Warranty repair costs | $ 9,980 | $ 7,960 |
| Design engineering | $ 4,475 | $ 6,775 |
| Inspection | $ 3,500 | $ 4,600 |
| Rework | $ 8,980 | $ 5,800 |
| Total COQ | $ 39,435 | $ 36,535 |
| Total Revenue | $500,000 | $575,000 |
- 1. Identify the costs-of-quality category (prevention, appraisal, internal failure, and external failure) for each of these costs.
Required
- 2. Prepare a COQ report by calculating the costs of quality for each category and the ratio of each COQ category to revenues and total quality costs.
- 3. Based on the results of requirement 2, would you conclude that Adirondack’s quality program has been successful? Prepare a short report to present your case.
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Students have asked these similar questions
Otto Enterprises produces wind turbines. Use the list below to calculate the percent of appraisal cost of the total cost of quality.
Equipment maintenance.
Inspecting raw materials
Product recalls
Scrap of defective products
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Warranty claims
Total cost of quality
$ 31,500
45,000
18,500
12,500
26,000
16,500
$ 150,000
PROBLEM. Please show your computations to receive full credit.
Mariposa Manufacturing builds custom wooden cabinets. Mariposa Manufacturing has reported the following costs for the
previous year. Assume no production inventories.
Advertising
$70,500
$34,000
$117,800
$63,000
$17,500
$76,000
$3,800
$40,700
$41,600
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Cost of hardware (sides, handles, etc.)
Cost of Wood
Depreciation on Production Equipment
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Glue
Production Supervisor Salary
Sales Manager Salary
Utilities for Factory
Wages for Maintenance Workers
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$91,400
$77,800
Compute the following:
i. Direct material costs
ii. Direct labor cost
iii. Manufacturing overhead
iv. Total manufacturing cost
v. Prime cost
vi. Conversion cost
vii. Total period cost
Edit Format Table
12pt v Paragraph
B IU A
Your company makes products XYZ and PQR. The following quality cost-related information is available for each product.
For product XYZ:
Warranty repair costs
Reliability engineering
Rework at Greenspan's manufacturing plant
Manufaeturing inspeetion
Transportation costs to customer sites to fix problems
Quality training for employees
$120,000
355,000
70,000
40,000
25,000
75,000
For product PQR:
Prevention costs
79.4%
Appraisal costs
Internal failurc costs
3.7%
9.6%
External failure costs
7.3%
Total quality costs
100.0%
1. Calculate the total amounts of prevention cost, appraisal cost, internal failure cost, and external failure cost for product XYZ.
2. Based on what you found in (1) above, find the percentage of each category of quality cost to the total quality costs for product
XYZ
3. Is the company spending its quality costs similarly for XYZ and PQR? Explain your answer.
Chapter 19 Solutions
EBK HORNGREN'S COST ACCOUNTING
Ch. 19 - Describe two benefits of improving quality.Ch. 19 - Prob. 19.2QCh. 19 - Name two items classified as prevention costs.Ch. 19 - Give two examples of appraisal costs.Ch. 19 - Distinguish between internal failure costs and...Ch. 19 - Describe three methods that companies use to...Ch. 19 - Companies should focus on financial measures of...Ch. 19 - Give two examples of nonfinancial measures of...Ch. 19 - Give two examples of nonfinancial measures of...Ch. 19 - When evaluating alternative ways to improve...
Ch. 19 - Distinguish between customer-response time and...Ch. 19 - Prob. 19.12QCh. 19 - Give two reasons why delays occur.Ch. 19 - Companies should always make and sell all products...Ch. 19 - Prob. 19.15QCh. 19 - Rector Corporation is examining its quality...Ch. 19 - Six Sigma is a continuous quality improvement...Ch. 19 - Costs of quality. (CMA, adapted) Osborn, Inc.,...Ch. 19 - Costs of quality analysis. Adirondack Company...Ch. 19 - Costs-of-quality analysis. Safe Travel produces...Ch. 19 - Costs of quality, quality improvement. iCover...Ch. 19 - Prob. 19.22ECh. 19 - Prob. 19.23ECh. 19 - Waiting time. Its a Dogs World (IDW) makes toys...Ch. 19 - Waiting time, service industry. The registration...Ch. 19 - Waiting time, cost considerations, customer...Ch. 19 - Nonfinancial measures of quality and time. For the...Ch. 19 - Nonfinancial measures of quality, manufacturing...Ch. 19 - Statistical quality control. Harvest Cereals...Ch. 19 - Quality improvement, Pareto diagram,...Ch. 19 - Quality improvement, relevant costs, and relevant...Ch. 19 - Quality improvement, relevant costs, and relevant...Ch. 19 - Waiting times, manufacturing cycle times. The...Ch. 19 - Prob. 19.34PCh. 19 - Manufacturing cycle times, relevant revenues, and...Ch. 19 - Compensation linked with profitability, waiting...Ch. 19 - Ethics and quality. Weston Corporation...Ch. 19 - Prob. 19.38P
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