Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Textbook Question
Chapter 14, Problem 27E
Using the Taguchi quality loss function, an average loss of $20 per unit is calculated. During the year, 25,000 units were produced. Which of the following statements represents the correct application of the Taguchi loss function?
- a. The hidden costs of internal failure are $500,000.
- b. The hidden costs of external failure are $500,000.
- c. The costs of detection activities are $20 per unit inspected.
- d. The total external costs are $500,000.
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Red Company reported sales of $8,100,000 in 2010. At the end of the year, the following quality costs were reported: Design review $405,000; Recalls 135,000; Reinspection 67,500; Materials inspection 54,000; Quality training 135,000; Process acceptance 67,500; Scrap 47,250; Lost sales 270,000; Product inspection 40,500; Returned goods 128,250.
REQUIRED:
1.Compute for the total external failure costs
2.compute for the total prevention costs.
Walton Company has measured its quality costs for the past two years. After the company gathers its quality cost data, it summarizes
those costs using the four categories shown below:
This Year
$ 357,000 $ 650,000
$ 445,000 $ 545,000
$ 790,000 $ 500,000
$1,100,000 $ 680,000
Last Year
Prevention costs
Appraisal costs
Internal failure costs
External failure costs
Required:
1. Calculate the total cost of quality last year and this year.
Last Year
This Year
Total cost of quality
$ 2,692,000 $ 2,375,000
2. For last year, calculate the cost in each of the four categories as a percent of the total cost of quality. (Round your answers to 1
decimal place.)
Last Year
Prevention costs
13.3 %
Appraisal costs
16.5 %
Internal failure costs
%
40.9 %
70.7 %
External failure costs
Total percent
Walton Company has measured its quality costs for the past two years. After the company gathers its quality cost data, it summarizes
those costs using the four categories shown below:
Prevention costs
Appraisal costs
Internal failure costs
External failure costs
Last Year
$ 357,000
$ 445,000
$ 790,000
$ 1,100,000
This Year
$ 650,000
$ 545,000
$ 500,000
$ 680,000
Required:
1. Calculate the total cost of quality last year and this year.
2. For last year, calculate the cost in each of the four categories as a percent of the total cost of quality.
3. For this year, calculate the cost in each of the four categories as a percent of the total cost of quality.
4-a. Calculate the change in total cost of quality over the two-year period.
4-b. Is performance trending in a favorable or unfavorable direction?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Required 3 Required 4A Required 48
Calculate the change in total cost of quality over the two-year…
Chapter 14 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 14 - What is the difference between quality of design...Ch. 14 - Why are quality costs the costs of doing things...Ch. 14 - Prob. 3DQCh. 14 - Describe the Taguchi quality loss function, and...Ch. 14 - Identify and discuss the four kinds of quality...Ch. 14 - Explain why external failure costs can be more...Ch. 14 - Prob. 7DQCh. 14 - Prob. 8DQCh. 14 - Describe the three types of quality performance...Ch. 14 - Prob. 10DQ
Ch. 14 - If a firms annual sales are 200 million, what...Ch. 14 - Explain why it is important for a manager to...Ch. 14 - Prob. 13DQCh. 14 - Explain why the Accounting Department should be...Ch. 14 - Prob. 15DQCh. 14 - What is ecoefficiency?Ch. 14 - Prob. 17DQCh. 14 - Prob. 18DQCh. 14 - Prob. 19DQCh. 14 - What are the four categories of environmental...Ch. 14 - Prob. 21DQCh. 14 - What does full environmental costing mean? Full...Ch. 14 - What information is communicated by the unit...Ch. 14 - Evans Company had total sales of 3,000,000 for...Ch. 14 - Prob. 2CECh. 14 - Ross Company implemented a quality improvement...Ch. 14 - Nabors Company had actual quality costs for the...Ch. 14 - Verde Company reported operating costs of...Ch. 14 - Pinter Company had the following environmental...Ch. 14 - Rachel Boyce, president of a company that...Ch. 14 - Quality attributes such as performance and...Ch. 14 - Stahman, Inc., estimates its hidden external...Ch. 14 - Prob. 10ECh. 14 - Abernathy, Inc., produces two different generators...Ch. 14 - Kang Company reported sales of 3,240,000 in 20x5....Ch. 14 - Gagnon Company reported the following sales and...Ch. 14 - Muskogee Company had sales of 60,000,000 in 20x1....Ch. 14 - Javier Company has sales of 8 million and quality...Ch. 14 - In 20x4, Tru-Delite Frozen Desserts, Inc.,...Ch. 14 - Prob. 17ECh. 14 - Prob. 18ECh. 14 - Achieving sustainable development will likely...Ch. 14 - Classify the following environmental activities as...Ch. 14 - At the end of 20x5, Bing Pharmaceuticals began to...Ch. 14 - Prob. 22ECh. 14 - Coyle Pharmaceuticals produces two organic...Ch. 14 - Prob. 24ECh. 14 - Which of the following quality costs is an...Ch. 14 - Which of the following would be a hidden quality...Ch. 14 - Using the Taguchi quality loss function, an...Ch. 14 - Environmental costs are those costs incurred...Ch. 14 - Two products, Product A and Product B, are...Ch. 14 - Kathy Shorts, president of Oliver Company, was...Ch. 14 - Panguitch Company manufactures a component for...Ch. 14 - Gaston Company manufactures furniture. One of its...Ch. 14 - Classify the following quality costs as...Ch. 14 - Wayne Johnson, president of Banshee Company,...Ch. 14 - Recently, Ulrich Company received a report from an...Ch. 14 - In 20x5, Major Company initiated a full-scale,...Ch. 14 - Paper Products Division produces paper diapers,...Ch. 14 - In 2011, Milton Thayne, president of Carbondale...Ch. 14 - Iona Company, a large printing company, is in its...Ch. 14 - Prob. 40PCh. 14 - The following items are listed in an environmental...Ch. 14 - Refer to Problem 14.41. In the environmental...Ch. 14 - The following environmental cost reports for 20x3,...Ch. 14 - Refer to Problem 14.43. In 20x3, Jack Carter,...
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