Dacosta & Co. makes electronic components. Chris Dacosta, the president, recently instructed Vice President Jim Bruegger to develop a total quality control program "if we don't at leastthe quality improvements our competitors arehesoonbegan by listing various "costsDacosta incurs. Thefirst six items that came to mind were(Click the icon to view the information)Classify each item as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost. Then, determine the total cost of quality by category.Begin by classifying each item as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost by entering each amount in the appropriate column, then, determinethe total cost of quality by category. (If an input field is not used in the table leave the input field empty; do not enter a zero.)Prevention CostAppraisal CostInternal Failure CostExternal Failure Cost15000More info27500Print30000aCosts incurred by Dacosta customer representatives traveling to customer sites to repair defectiveproducts, $15,000b.Lost profits from lost sales due to reputation for less-than-perfect products, $50,000c Costs of inspecting components in one of Dacosta's production processes, $27,500d. Salaries of engineers who are redesigning components to withstand electrical overloads, $55,000e Costs of reworking defective components after discovery by company inspectors, $30,000it Costs of electronic components returned by customers, $30,000.Done95000

Lets understand the basics.Prevention cost is a cost incurred to prevent any defects.Appraisal costs…

Dacosta & Co. makes electronic components Chris Dacosta, the president, recently instructed Vice President Jim Bruegger to develop a total quality control program if we don't at least match the quality improvements our competitors are making," he told Bruegger, we'll soon be out of business" Bruegger began by listing various "costs of quality that Dacosta incurs. The first six items that came to mind were (Click the icon to view the information) Classify each item as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost. Then, determine the total cost of quality by category Begin by classifying each item as a prevention cost, an appraisal cost, an internal failure cost, or an extemal failure cost by entering each amount in the appropriate column, then, determine the total cost of quality by category (f an input field is not used in the table leave the input field empty, do not enter a zero) Prevention Cost Appraisal Cost Internal Failure Cost 30000 External Failure Cost 95000 15000 27500

Dacosta & Co. makes electronic components Chris Dacosta, the president, recently instructed Vice President Jim Bruegger to develop a total quality control program if we don't at least match the quality improvements our competitors are making," he told Bruegger, we'll soon be out of business" Bruegger began by listing various "costs of quality that Dacosta incurs. The first six items that came to mind were (Click the icon to view the information) Classify each item as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost. Then, determine the total cost of quality by category Begin by classifying each item as a prevention cost, an appraisal cost, an internal failure cost, or an extemal failure cost by entering each amount in the appropriate column, then, determine the total cost of quality by category (f an input field is not used in the table leave the input field empty, do not enter a zero) Prevention Cost Appraisal Cost Internal Failure Cost 30000 External Failure Cost 95000 15000 27500

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter13: Emerging Topics In Managerial Accounting

Section: Chapter Questions

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

See similar textbooks

Similar questions

Classifying quality costs Darrel & Co. makes electronic components. Chris Darrel, the president, recently instructed Vice President Jim Bruegger to develop a total quality control program. “If we don’t at least match the quality improvements our competitors are making,” he told Bruegger, “we’ll soon be out of business.” Bruegger began by listing various “costs of quality” that Darrel incurs. The first six items that came to mind were: Costs incurred by Darrel customer representatives traveling to customer sites to repair defective products, $13,000. Lost profits from lost sales due to reputation for less-than-perfect products, $35,000. Costs of inspecting components in one of Darrel’s production processes, $40,000 Salaries of engineers who are redesigning components to withstand electrical overloads, $65,000. Costs of reworking defective components after discovery by company inspectors, $50,000. Costs of electronic components returned by customers, $70,000. Classify each item…
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: Required: 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. 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. Prepare a graph that compares the trend in relative control costs versus relative failure costs. Comment on the significance of this trend.
Abernathy, Inc., produces two different generators and is concerned about their quality. The company has identified the following quality activities and costs associated with the two products: Required: 1. Calculate the quality cost per unit for each product, and break this unit cost into quality cost categories. Which of the two seems to have the lowest quality? 2. How might a manager use the unit quality cost information?
Kathy Shorts, president of Oliver Company, was concerned with the trend in sales and profitability. The company had been losing customers at an alarming rate. Furthermore, the company was barely breaking even. Investigation revealed that poor quality was at the root of the problem. At the end of 20x5, Kathy decided to begin a quality improvement program. As a first step, she identified the following costs in the accounting records as quality related: Required: 1. Prepare a quality cost report by quality cost category. 2. Calculate the relative distribution percentages for each quality cost category. Comment on the distribution. 3. Using the Taguchi loss function, an average loss per unit is computed to be 15 per unit. What are the hidden costs of external failure? How does this affect the relative distribution? 4. Shortss quality manager decided not to bother with the hidden costs. What do you think was his reasoning? Any efforts to reduce measured external failure costs will also reduce the hidden costs. Do you agree or disagree? Explain.
In 20X1, Don Blackburn, president of Price Electronics, received a report indicating that quality costs were 31% of sales. Faced with increasing pressures from imported goods. Don resolved to take measures to improve the overall quality of the companys products. After hiring a consultant in 20X1, the company began an aggressive program of total quality control. At the end of 20X5, Don requested an analysis of the progress the company had made in reducing and controlling quality costs. The accounting department assembled the following data: Required: 1. Compute the quality costs as a percentage of sales by category and in total for each year. 2. Prepare a multiple-year trend graph for quality costs, both by total costs and by category. Using the graph, assess the progress made in reducing and controlling quality costs. Does the graph provide evidence that quality has improved? Explain. 3. Using the 20X1 quality cost relationships (assume all costs are variable), calculate the quality costs that would have prevailed in 20X4. By how much did profits increase in 20X4 because of the quality improvement program? Repeat for 20X5.
Aaron McKinney is a cost accountant for Majik Systems Inc. Martin Dodd, Vice President of Marketing, has asked Aaron to meet with representatives of Majik Systems’ major competitor to discuss product cost data. Martin indicates that the sharing of these data will enable Majik Systems to determine a fair and equitable price for its products. Instructions: Would it be ethical for Aaron to attend the meeting and share the relevant cost data? Explain your answer using150 words or more
Clarke, Inc. manufactures door panels. Suppose Clarke, Inc. is considering spending the following amounts on a new total quality management (TQM) program: View the spending amounts. Clarke, Inc. expects the new program would save costs through the following: View the savings amounts. Requirements 1. Classify each cost as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost. 2. Should Clarke, Inc. implement the new quality program? Give your reason. Requirement 1. Classify each cost as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost. Type of Cost Strength-testing one item from each batch of panels Training employees in TQM Training suppliers in TQM Identifying suppliers who commit to on-time delivery of perfect-quality materials Lost profits from lost sales due to disappointed customers Rework and spoilage Inspection of raw materials Warranty costs Savings Avoid lost profits from lost sales due to…
Classifying quality costs and using these costs to make decisions Loiselle manufactures high-quality speakers. Suppose Loiselle is considering spending the following amounts on a new quality program: It also expects this program to avoid lost profits from the following: Requirements Classify each of these costs into one of the four categories of quality costs (prevention, appraisal, internal failure, or external failure). Should Loiselle implement the quality program? Give your reasons.
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: Question Content Areaa. Identify the cost of quality classification for each activity and whether the activity is value-added or non-value-added. Quality Control Activities Activity Cost Quality Cost Classification Value-Added/Non-Value-AddedClassificationBilling error correction $42,800 External failure Non-value-addedCable signal testing 117,300 Appraisal Non-value-addedReinstalling service (installed incorrectly the first time) 92,000 Internal failure Non-value-addedRepairing satellite equipment 20,700 Internal failure Non-value-addedRepairing underground cable connections to the customer 27,800 Internal failure Non-value-addedReplacing old technology cable with higher quality cable 142,000 Appraisal Value-addedReplacing old technology signal switches…
Robotic Construction Toys Corp. is using a costs-of-quality approach to evaluate design engineering efforts for a new toy robot. The company's senior managers expect the engineering work to reduce appraisal, internal failure, and external failure activities. The predicted reductions in activities over the two-year life of the toy robot follow. Also shown are the cost allocation rates for the activities. (Click on the icon to view the information.) Data table Activity Inspection of incoming materials Inspection of finished goods.... Number of defective units discovered in-house. Number of defective units discovered by customers.. Lost sales to dissatisfied customers Requirements ...... **** Predicted Reduction in Activity Units 3. What major difficulty would management have had in implementing this costs-of-quality approach? What alternative approach could it use to measure quality improvement? 300 $ 300 $ 3,200 $ 900 $ 320 $ - 1. Calculate the predicted quality cost savings from the…
The management of Boogie Company thinks that its total costs of quality can be reduced by increasing expenditures in certain key costs of quality categories. The following costs of quality have been identified by management: Cost of Quality Rework Recalls Reengineering efforts Repair Replacements Retesting Supervision Scrap Training Testing of incoming materials Inspection of work in process Downtime Product liability insurance Quality audits Continuous improvement Warranty repairs Costs P 6.000.00 15,000.00 9.000.00 12.000.00 12.000.00 5.000.00 18,000.00 9,000.00 15.000.00 7.000.00 18,000.00 10,000.00 9,000.00 5.000.00 1000.00 15,000.00 Required: 1. Classify these costs into the four costs of quality categories 2. Determine the total pesos being spent on each of the categories 3. Based on the company's expenditures by cost of quality categories, on which cost category should the company concentrate its efforts to decrease its overall costs of quality?
Grayson Industries manufactures freezers. Here is some information about its "LX17" line of freezers over the past year: (Click the icon to view the information.) Read the requirements. Requirement 1. Prepare a Cost of Quality (COQ) report. In addition to calculating the total costs of each category, calculate the percentage of COQ category of the total COQ. (Round the percentage to the one tenth of a percent, X.X% input field is not used in the table, leave the input field empty; do not select a label or enter a zero.) Grayson Cost of Quality Report Prevention Costs: Total prevention costs Appraisal Costs: Total appraisal costs Internal Failure Costs: Total internal failure costs External Failure Costs: Total external failure costs Total costs of quality Costs Incurred Total Costs of Percentage of Total Costs Quality of Quality (Rounded) % Data table % Requirements 1. Prepare a Cost of Quality (COQ) report. In addition to calculating the total costs of each category, calculate the…