EBK HORNGREN'S COST ACCOUNTING
16th Edition
ISBN: 9780134475950
Author: Datar
Publisher: PEARSON CO
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Textbook Question
Chapter 19, Problem 19.28E
Nonfinancial measures of quality, manufacturing cycle efficiency. (CMA, adapted) Turnkey Manufacturing evaluates the performance of its production managers based on a variety of factors, including cost, quality, and cycle time. The following are nonfinancial measures for quality and time for 2016 and 2017 for its only product:
| Nonfinancial Quality Measures | 2016 | 2017 |
| Number of returned goods | 500 | 1,000 |
| Number of defective units reworked | 2,500 | 2,000 |
| Annual hours spent on quality training per employee | 36 | 54 |
| Number of units delivered on time | 20,000 | 34,000 |
| Annual Totals | 2016 | 2017 |
| Units of finished goods shipped | 25,000 | 1,800 |
| Average total hours worked per employee | 40,000 | 1,800 |
The following information relates to the average amount of time needed to complete an order:
| Time to Complete an Order | 2016 | 2017 |
| Wait time | ||
| From customer placing order to order being received by production | 14 | 10 |
| From order received by production to machine being set up for production | 9 | 7 |
| Inspection time | 5 | 3 |
| Process time | 4 | 4 |
| Move time | 2 | 2 |
- 1. Compute the manufacturing cycle efficiency for an order for 2016 and 2017.
Required
- 2. For each year 2016 and 2017, calculate the following:
- a. Percentage of goods returned
- b. Defective units reworked as a percentage of units shipped
- c. Percentage of on-time deliveries
- d. Percentage of hours spent by each employee on quality training
- 3. Evaluate management’s performance on quality and timeliness in 2016 and 2017.
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Question 3
The Buffalo Machine Sdn. Bhd. was evaluating its cost structure relating to quality costs. Below
items are the cost of quality in the year 2020. With this allocation of quality costs, the company lost
20% of sales due to poor performance. To improve the situation, the company would like to perform
the cost of quality analysis.
Items
Product Reliability Test
Process Quality Assurance Audit
Rework Cost
Production Inspection
Supplier Quality System Audit
Defect Repair Cost
Market Defect Cost
Sampling Inspection
Quality Assurance Training
Product Warranty Cost
Cost/RM
10000
8500
12000
12000
5500
18000
80000
8000
16000
40000
a) Identify the items for prevention, appraisal, and failure costs.
b) Compute the ratio of prevention, appraisal, and failure costs to total quality costs.
c) Based on the analysis of the cost of quality, recommend the company's actions to improve the
product quality.
Brant Freezer Warehouse Performance
2016 Figures
Units Shipped
12 Months 5 Months
Jan.-Dec. through
May 31
Units Shipped
Projected Actual
12 Months 5 Months
Jan.-Dec. May 31
Atlanta
17,431
4,080
35,890
18,000
Boston
6,920
3,061
27,915
7,200
Chicago 28,104
14,621 246,315
131,618 30,000
Denver
3,021
1,005a
28,019
8,600*
3,100
Fargo
2,016
980
16,411
8,883
2,000
Los Angeles 16,491 11,431
151,975 109,690
17,000
Portland
8,333
4,028
73,015
36,021
9,000
St. Louis
5,921
2,331
51,819
23,232
8,000
Warehouse Costs
12 Months 5 Months
Jan.-Dec. through
May 31
156,830
63,417
2017 Figures
a Denver warehouse closed by strike March 4-19, 2016.
Warehouse Costs
Budgeted Actual Costs
12 Months
Jan.-Dec.
4,035
178,000
3,119
73,000
15,230 285,000
1,421
31,000
804
17,000
9,444
176,000
4,600
85,000
2,116
56,000
through
May 31
40,228
29,416
141,222
14,900
9,605
93,280
42,616
19,191
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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