Charles Berkle is the manager of Nogain Manufacturing and is interested in doing a cost of quality analysis. The following cost and revenue data are available for the most recent year ended December 31: Sales revenue Cost of goods sold. Warranty expense Inspection costs Scrap and rework Product returns due to defects Depreciation expense Machine maintenance expense Wage expense Machine breakdown costs Estimated lost sales due to poor quality $ 250,000 140,000 22,000 14,000 7,800 6,000 10,000 3,400 35,000 4,000 5,000 Required: a. Classify each of these costs into the four quality cost categories and prepare a cost of quality report for Nogain. b. What percentage of sales revenue is being spent on prevention and appraisal activities? c. What percentage of sales revenue is being spent on internal and external failure costs?

Charles Berkle is the manager of Nogain Manufacturing and is interested in doing a cost of quality analysis. The following cost and revenue data are available for the most recent year ended December 31: Sales revenue Cost of goods sold. Warranty expense Inspection costs Scrap and rework Product returns due to defects Depreciation expense Machine maintenance expense Wage expense Machine breakdown costs Estimated lost sales due to poor quality $ 250,000 140,000 22,000 14,000 7,800 6,000 10,000 3,400 35,000 4,000 5,000 Required: a. Classify each of these costs into the four quality cost categories and prepare a cost of quality report for Nogain. b. What percentage of sales revenue is being spent on prevention and appraisal activities? c. What percentage of sales revenue is being spent on internal and external failure costs?

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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Charles Berkle is the manager of Nogain Manufacturing and is interested in doing a cost of quality analysis. The following cost and revenue data are available for the most recent year ended December 31: Sales revenue Cost of goods sold Warranty expense Inspection costs Scrap and rework Product returns due to defects Depreciation expense Machine maintenance expense Wage expense Machine breakdown costs Estimated lost sales due to poor quality $ 250,000 140,000 22,000 13,000 7,600 6,000 10,000 2,800 35,000 4,000 5,000 Required: a. Classify each of these costs into the four quality cost categories and prepare a cost of quality report for Nogain. b. What percentage of sales revenue is being spent on prevention and appraisal activities? c. What percentage of sales revenue is being spent on internal and external failure costs?
The auto repair shop of Quality Motor Company uses standards to control the labor time and labor cost in the shop. The standard labor cost for a motor tune-up is given below: Standard Hours Standard Rate Standard Cost Motor tune-up 2.5 $25.00 $62.50 The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 50 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups: Labor rate variance $ 150 F Labor spending variance $ 200 U Required: 1. Determine the number of actual labor-hours spent on tune-ups during the week. 2. Determine the actual hourly rate of pay for tune-ups last week. (Round your answer to 2 decimal places.)
Walton Company measured its quality costs for the past two years and summarized those costs using the four categories shown below: Prevention costs Appraisal costs Internal failure costs External failure costs Last Year $ 324,900 $ 409,400 $ 869,000 $ 1,188,000 This Year $ 689,000 $ 545,000 $ 550,000 $ 673,200 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?
1. How much is the total prevention costs? 2. How much is the total appraisal costs? 3. How much is the total internal failure costs? 4. How much is the total external failure costs?
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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
S Frank Weston, supervisor of the Freemont Corporation's Machining Department, was visibly upset after being reprimanded for his department's poor performance over the prior month. The department's cost control report is given below: FREEMONT CORPORATION-MACHINING DEPARTMENT Cost Control Report For the Month Ended June 30 Machine-hours Direct labour wages Supplies Maintenance Utilities Supervision Depreciation Total Actual 40,040 $ 86,100 24,290 145,800 17,740 41,400 83,400 $398,730 Static Budget 36,700 $ 84,410 22,020 142,670 17,070 41,400 83,400 $390,970 Static Budget Required: 1. This part of the question is not part of your Connect assignment. Variance $ 1,690 U 2,270 U 3,130 U 670 U 10 0 $ 7,760 U "I just can't understand all of these unfavourable variances," Weston complained to the supervisor of another department. "When the boss called me in, I thought he was going to give me a pat on the back because I know for a fact that my department worked more efficiently last month than…
At the end of their fiscal year Western Industries Ltd. reported the following selected, unadjusted balances:Raw Materials Inventory - $6,000Work in Process Inventory - $62,250Finished Goods Inventory - $74,700Cost of Goods Sold - $278,050Manufacturing Overhead - $2,850 creditWestern Industries uses the proration method to eliminate any balance in Manufacturing Overhead. Which of the following is the correct journal entry to eliminate the balance in Manufacturing Overhead? Select answer from the options below Manufacturing Overhead 2,850.00 Raw Materials Inventory 80.00 Work in Process Inventory 415.00 Finished Goods Inventory 499.00 Cost of Goods Sold 1,856.00 Work in Process Inventory 427.50 Finished Goods Inventory 513.00 Cost of Goods Sold 1.909.50 Manufacturing Overhead 2,850.00 Manufacturing Overhead 2,850.00 Finished Goods Inventory 603.50 Cost of Goods Sold 2,246.50 Manufacturing Overhead 2,850.00 Work in…
Bonita Company produced 10,200 units during the past year but sold only 8,700 of the units. The following additional information is also available: Direct materials used Direct labour incurred Variable manufacturing overhead Fixed manufacturing overhead Fixed selling and administrative expenses Variable selling and administrative expenses $88,740 34,170 22,440 46,410 (a) 69,400 10,200 There was no work in process inventory at the beginning of the year. Bonita did not have any beginning finished goods inventory either. Calculate Bonita Company's finished goods inventory cost on December 31 under variable costing. (Round per unit calculations to 2 decimal places, e.g. 15.25 and final answer to 0 decimal places, e.g. 125.)
Assume that the defective goods were charged to all jobs, what is the cost transferred to finished goods at the end of the year? a.) 342,000 b.) 335,000 c.) 349,740 d.) 342,500
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