A. Jennifer incurs the following quality costs:$17,000 on systems development$8,000 on the depreciation of test equipment$102,000 on warranty repairs$27,000 on the net cost of scrap$16,000 on the net cost of spoilage$77,000 on audits of the effectiveness of thequality system.What are the total internal failure costs?B. Tyler's Inc. makes soap. Tyler plans to produce5000 soaps next month. 5000 soaps require 3000tons of detergent at the cost of $11 a ton. Tyleralso estimates the need for 10 workers to work 8hours a day to meet the next month's productiontarget. The current labor rate is $16.50/hr. Tylerestimates fixed manufacturing overhead cost tobe $42,000 for the year and variablemanufacturing overhead to be $15 per labor hour.The company plans to sell the soaps for $27 each.What is the total prime cost incurred by Tyler forthe next month? (Assume the month has 30 days)

Step 1 Internal failure cost is the quality cost which is spent by entity to rework or to rectify…

A. Jennifer incurs the following quality costs: $17,000 on systems development $8,000 on the depreciation of test equipment $102,000 on warranty repairs $27,000 on the net cost of scrap $16,000 on the net cost of spoilage $77,000 on audits of the effectiveness of the

A. Jennifer incurs the following quality costs: $17,000 on systems development $8,000 on the depreciation of test equipment $102,000 on warranty repairs $27,000 on the net cost of scrap $16,000 on the net cost of spoilage $77,000 on audits of the effectiveness of the

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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Question

A. Jennifer incurs the following quality costs:
$17,000 on systems development
$8,000 on the depreciation of test equipment
$102,000 on warranty repairs
$27,000 on the net cost of scrap
$16,000 on the net cost of spoilage
$77,000 on audits of the effectiveness of the
quality system.
What are the total internal failure costs?
B. Tyler's Inc. makes soap. Tyler plans to produce
5000 soaps next month. 5000 soaps require 3000
tons of detergent at the cost of $11 a ton. Tyler
also estimates the need for 10 workers to work 8
hours a day to meet the next month's production
target. The current labor rate is $16.50/hr. Tyler
estimates fixed manufacturing overhead cost to
be $42,000 for the year and variable
manufacturing overhead to be $15 per labor hour.
The company plans to sell the soaps for $27 each.
What is the total prime cost incurred by Tyler for
the next month? (Assume the month has 30 days)

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