MyLab Accounting with Pearson eText -- Access Card -- for Horngren's Cost Accounting
16th Edition
ISBN: 9780134476384
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Question
Chapter 19, Problem 19.22E
1.
To determine
Prevention Cost:
Prevention costs incurred to reduce the defects in the products that are to be produced. These are pre planned costs and are incurred before the commencement of production.
Appraisal Cost:
Appraisal costs are associated with the measurement and monitoring of activates relating to quality of a product. It includes the cost of evaluation of product material and production process.
Internal failure costs:
Internal failure costs are those that are incurred because of the production of products that are not manufactured as per the requirements of the consumer but are identified before the delivery of the product to its buyer.
External Failure Cost:
External failure cost relate to the defects found out in the products because the product was not manufactured as per the requirements of the customer but are identified after the actual delivery of the product to its buyer.
To determine: Whether to change the component of the printing press or not.
2.
To determine
The additional number of printing press that are to be sold in order to justify the investment in new component.
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Quality improvement, relevant costs, relevant revenues. SpeedPrint manufactures and sells 18,000 high-technology printing presses each year. The variable and fixed costs of rework and repair are as follows:
Variable Cost Fixed Cost Total Cost
Rework Cost per hr. $79 $115 $194
Repair Cost
Customer Support cost/hr. 35 55 90
Transportation Cost/load 350 115 465
Warranty repair cost/hour 89 150 239
Speed Print’s current presses have a quality problem that causes variations in the shade of some colors. Its engineers suggest changing a key component in each press. The new component…
The Bremer Co. manufactures cordless telephones Bremer is planning to implement a JIT production system, which requires annual tooling costs of $150,000. Bremer estimates that the following annual benefits would arise from JIT production.
a. Average inventory will decline by $700,000 from $900,000 to $200,00
b. Insurance, space, materials handling, and setup costs, which currently total $200,00 would decline by 30%
c. The emphasis on quality inherent in JIT system would reduce rework costs by 20% Bremer currently incurs $350,000 on rework.
d. Better quality would eneble Bremer to raise the prices of its products by $3 per unit. Bremer sells $30,000 unit each year.
Bremer required rate of return on inventory investment is 12% per year
Required:
Calculate the net benefit or cost to the Bremer Corporation From implementing a JIT production system.
The Knot manufactures men’s neckwear at its Spartanburg plant. The Knot is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production:
a. Annual additional tooling costs $250,000 annually.
b. Average inventory would decline by 80% from the current level of $1,000,000.
c. Insurance, space, materials-handling, and setup costs, which currently total $400,000 annually, would decline by 20%.
d. The emphasis on quality inherent in JIT production would reduce rework costs by 25%. The Knot currently incurs $160,000 in annual rework costs.
e. Improved product quality under JIT production would enable The Knot to raise the price of its product by $2 per unit. The Knot sells 100,000 units each year.
The Knot’s required rate of return on inventory investment is 15% per year.
Q. What nonfinancial and qualitative factors should The Knot consider when making the decision to adopt JIT production?
Chapter 19 Solutions
MyLab Accounting with Pearson eText -- Access Card -- for 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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