Quality costs The accounting system for Dolment Co. reflected the following quality costs for Year 1 and Year 2: Customer refunds for poor product quality Fitting machines for mistake-proof operations Supply chain management activities Waste disposal Quality training Litigation claims for product defects Year 1 Year 2 $37,000 $29,000 9,400 11,800 9,000 10,000 44,000 36,000 26,000 30,000 81,000 64,000 a. Which of these are costs of compliance, and which are costs of noncompliance? b. Calculate the percentage change in each cost and for each category. Note: Round each percentage change to the nearest whole percentage. Note: Indicate a decrease with a negative sign. Customer refunds for poor product quality Fitting machines for mistake-proof operations Supply chain management activities Waste disposal Quality training Litigation claims for product defects Compliance cost category Noncompliance cost category Year 1 Year 2 Percentage Change $37,000 $29,000 % 9,400 11,800 % ÷ 9,000 10,000 % 44,000 36,000 % 26,000 30,000 % 81,000 64,000 % % %

Quality costs The accounting system for Dolment Co. reflected the following quality costs for Year 1 and Year 2: Customer refunds for poor product quality Fitting machines for mistake-proof operations Supply chain management activities Waste disposal Quality training Litigation claims for product defects Year 1 Year 2 $37,000 $29,000 9,400 11,800 9,000 10,000 44,000 36,000 26,000 30,000 81,000 64,000 a. Which of these are costs of compliance, and which are costs of noncompliance? b. Calculate the percentage change in each cost and for each category. Note: Round each percentage change to the nearest whole percentage. Note: Indicate a decrease with a negative sign. Customer refunds for poor product quality Fitting machines for mistake-proof operations Supply chain management activities Waste disposal Quality training Litigation claims for product defects Compliance cost category Noncompliance cost category Year 1 Year 2 Percentage Change $37,000 $29,000 % 9,400 11,800 % ÷ 9,000 10,000 % 44,000 36,000 % 26,000 30,000 % 81,000 64,000 % % %

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 28BEB: Quality Cost Report Loring Company had total sales of 2,400,000 for fiscal 20X1. The costs of...

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MKD Company's quality cost report is to be based on the following data: 3,550,000 Test and inspection of incoming materials Supplies used in testing and inspection 2,550,000 Re-entering data because of keying errors Statistical process control activities Technical support provided to suppliers 3,000,000 4,100,000 4,550,000 Disposal of defective products Lost sales due to poor quality 3,000,000 4,350,000 Net cost of crap 4,250,000 Warranty repairs and replacements 3,500,000 Required: Prepare a Quality Cost Report in good from with separate sections for prevention costs, appraisal costs, internal failure costs, and external failure costs
Fabrick Company's quality cost report is to be based on the following data: Lost sales due to poor quality Quality data gathering, analysis, and reporting Net cost of spoilage Re-entering data because of keying errors Test and inspection of in-process goods Final product testing and inspection Statistical process control activities Returns arising from quality problems Downtime caused by quality problems $ 20,30 $ 63,306 $ 60,200 $ 24,100 $ 11,200 $ 44,400 $ 43,100 $ 36,100 $ 59,800 What would be the total appraisal cost appearing on the quality cost report? Multiple Choice $162,000 $91,300 $71.400 $55.600 [O ASUS ge here to search
Quality Control Activities Product testing Assessing vendor quality Recalls Rework Scrap disposal Product design Training machine operators Warranty work Process audits Schedule of Activity Costs LA From the provided schedule of activity costs, determine the external failure costs. S Activity Cost $55,000 26,000 18,000 29,000 8,000 30,000 46,000 12,000 22,000
A lean manufacturer reports the following quality costs. Prepare a cost of quality report. $ 50,000 Training machine operators Product recalls 20,000 12,000 18,000 $ 100,000 Scrap of defective products Inspecting finished goods Total Prevention Appraisal Quality Category Internal failure External failure Total cost of quality Cost of Quality Report Cost Category Total % of Total Cost of Quality % % % de se % %
Schedule of Activity Costs Quality Control Activities Product testing Assessing vendor quality Recalls Rework Scrap disposal Product design Training machine operators Warranty work Process audits Activity Cost $55,000 26,000 18,000 29,000 8,000 30,000 46,000 12,000 22,000 From the provided schedule of activity costs, determine the internal failure costs.
Schedule of Activity Costs Quality Control Activities Product testing Assessing vendor quality Recalls Rework Scrap disposal Product design Training machine operators Warranty work Process audits From the provided schedule of activity costs, determine the (a) prevention and (b) appraisal costs. a. Prevention costs $ Activity Cost $55,000 26,000 18,000 29,000 8,000 30,000 46,000 12,000 22,000 b. Appraisal costs $
Cost of Quality Report This year, Finn Corporation implemented programs designed to assess the costs of quality for the company. However, the company recently suffered a data loss, and some of its records have been either partially or completely erased. The accounting intern for Finn Corporation has located a copy of a recent cost of quality report, shown as follows, but the quality activity analysis used to create the report has been lost. Finn Corporation Cost of Quality Report Percent of Total Percent of Quality Cost Classification Quality Cost Quality Cost Total Sales Prevention $161,040 61% 14.6% Appraisal 42,240 16 3.8 Internal failure 34,320 13 3.1 External failure 26,400 10 2.4 Totals $264,000 100% 24.0% Quality Activity Analysis As mentioned on the Cost of Quality Report, Finn Corporation recently suffered a data loss, and some of its records have been lost. After reviewing the Cost of Quality Report, recreate the quality activity analysis in the following table from which the…
Schedule of Activity Costs Quality Control Activities Process audits Training of machine operators Processing returned products Scrap processing (disposal) Rework Preventative maintenance Product design Warranty work Finished goods inspection Activity Cost $51,900 29,900 19,900 25,700 8,600 31,600 41,000 6,600 22,500 From the provided schedule of activity costs, determine the internal failure costs. Oa. $101,800 Ob. $27,440 Oc. $34,300 Od. $60,800
Pareto Chart and Cost of Quality Report for a Manufacturing Company The president of Mission Inc. has been concerned about the growth in costs over the last several years. The president asked the controller to perform an activity analysis to gain a better insight into these costs. The result of the activity analysis is summarized as follows: Activities Activity Cost Correcting invoice errors $11,250 Disposing of incoming materials with poor quality 9,000 Disposing of scrap 31,500 Expediting late production 27,000 Final inspection 22,500 Inspecting incoming materials 4,500 Inspecting work in process 22,500 Preventive machine maintenance 15,750 Producing product 67,500 Responding to customer quality complaints 13,500 Total $225,000 The production process is complicated by quality problems, requiring the production manager to expedite production and dispose of scrap. Required: 1. On paper or in a spreadsheet program, prepare a Pareto chart for each of the…
Schedule of Activity Costs Quality Control Activities Product testing Assessing vendor quality Recalls Rework Scrap disposal Product design Training machine operators Warranty work Process audits From the provided schedule of activity costs, determine the (a) value-added and (b) non-value-added costs. 2 a. Value-added costs $ Activity Cost $55,000 26,000 18,000 29,000 8,000 30,000 46,000 12,000 22,000 b. Non-value-added costs $
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.
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.