2. At the beginning of the month, a supplier of a component used in our product notified us that, because of a minor design improvement, theprice will be increased by 10% above the current standard price of $125 per unit. As a result of the improved design, we expect the number ofdefective components to decrease by 110 units per month. On average, 2,640 units of the component are purchased each month. Defectiveunits are identified prior to use and are not returnable.Effect on materials price variance $ 0Effect on materials quantity variance $ 0

Introduction: Material Price Variance Calculator is a highly useful tool for calculating material…

2. At the beginning of the month, a supplier of a component used in our product notified us that, because of a minor design improvement price will be increased by 10% above the current standard price of $125 per unit. As a result of the improved design, we expect the numbe defective components to decrease by 110 units per month. On average, 2,640 units of the component are purchased each month. Defecti units are identified prior to use and are not returnable. Effect on materials price variance $0 Effect on materials quantity variance $0

2. At the beginning of the month, a supplier of a component used in our product notified us that, because of a minor design improvement price will be increased by 10% above the current standard price of $125 per unit. As a result of the improved design, we expect the numbe defective components to decrease by 110 units per month. On average, 2,640 units of the component are purchased each month. Defecti units are identified prior to use and are not returnable. Effect on materials price variance $0 Effect on materials quantity variance $0

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In response to intense foreign competition, Florex Company has taken steps to improve the quality of its products. A summary of its quality costs (in thousands) over the past two years is given below: Last Year Inspection $ 765 $ 1,584 $ 540 $ 675 $630 $ 225 $ 1,260 $ 1,620 $O $ 225 $ 1,710 $ 1,170 $ 45 $ 81 $ 630 $ 900 $ 4,140 $ 1,260 $ 540 $ 1,530 $ 900 $ 1,440 $ 2,700 $ 990 Disposal of production defects $ 900 $ 900 Sales have been flat over the past few years, at $90,000,000 per year. Required: 1. Prepare a quality cost report for this year and last year. Quality engineering Depreciation of test equipment Rework labor Costs (in thousands) This Year Statistical process control Cost of field servicing Supplies used in testing Systems development Warranty repairs Net cost of scrap Product testing Product recalls
Verizon Manufacturing Company spent $420,000 in 2019 to inspect incoming components. Of the $420,000, $240,000 is fixed appraisal costs. The variable inspection cost is $0.20 per component. It takes six components for each finished product. Internal failure costs average $80 per failed unit of finished goods. In 2019, five percent of all completed items had to be reworked. External failure costs average $200 per failed unit. The company's average external failures are one percent of units sold. The company manufactures all units as ordered and carries no materials inventories. Seeking to decrease its total cost of quality (COQ), Verizon contracted Quality-is-Free Consultants, Inc. (QIFC) to study ways to improve product quality and to reduce costs. Upon completion of the study, QIFC recommended automatic inspection equipment that requires a $63,800 annual cost for training and $169,000 for equipment rental and maintenance. The new equipment will eliminate $49,500 of the fixed appraisal…
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In response to intense foreign competition, Florex Company has taken steps to improve the quality of its products. A summary of its quality costs (in thousands) over the past two years is given below: Inspection Quality engineering Depreciation of test equipment Rework labor Statistical process control Cost of field servicing Prevention costs: Total prevention costs Appraisal costs Total appraisal costs Internal failure costs: Total internal failure costs External failure costs: Costs (in thousands) Last Year This Year $ 630 $ 918 $ 540 $ 720 $ 180 Supplies used in testing Systems development Warranty repairs Net cost of scrap Product testing Product recalls $ 720 $ 990 $ 2,610 Disposal of production defects $ 900 Sales have been flat over the past few years, at $90,000,000 per year. Required: 1. Prepare a quality cost report for this year and last year. Note: Enter amount values in thousands. Round your percentage answers to 2 decimal places (i.e 0.1234 should be entered as 12.34).…
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Cost of quality Elijah Electronics makes wireless headphone sets. The firm produced 76,500 wireless headphone sets during its first year of operation. At year-end, it had no inventory of finished goods. Elijah sold 71,910 units through regular market channels, but 765 of the units produced were so defective that they had to be sold as scrap. The remaining units were reworked and sold as seconds. For the year, the firm spent $408,000 on prevention costs and $204,000 on quality appraisal. There were no customer returns. An income statement for the year follows. Sales Regular channel Seconds Scrap Cost of goods sold Original production costs Rework costs Quality prevention and appraisal Gross margin Selling and administrative expenses (all fixed) Profit before income taxes $14,382,000 363,375 26,775 $14,772,150 $4,889,880 107,100 612,000 $5,608,980 $9,163,170 2,499,000 $6,664,170 a. Compute the total pre-tax profit lost by the company in its first year of operations by selling defective…
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Note:- • Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. • Answer completely. • You will get up vote for sure.
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.