Clason, Inc. manufactures door panels. Suppose clason is considering sending the following amounts on a new total quality management (TQM) PROGRAM. (Information) Strength-testing one item from each batch of panels $ 68,000 Training employees in TQM 27,000 Training suppliers in TQM 39,000 Identifying suppliers who commit to on-time deliver of perfect-quality materials 58,000 Clason expects the new program would save costs through the following: (Information) Avoid lost profits from lost sales due to disappointed customers $86,000 Avoid rework and spoilage 63,000 Avoid inspection of raw materials 57,000 Avoid warranty costs 15,000 (Requirements) 1. Classigy each cost as a prevention cost, an appraisal cost, an internal faliure cost, or an external failure cost. 2. Should Clason implement the new quality program? Give your reason.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Clason, Inc. manufactures door panels. Suppose clason is considering sending the following amounts on a new total quality management (TQM) PROGRAM.
(Information)
Strength-testing one item from each batch of panels $ 68,000
Training employees in TQM 27,000
Training suppliers in TQM 39,000
Identifying suppliers who commit to on-time deliver of perfect-quality materials 58,000
Clason expects the new program would save costs through the following:
(Information)
Avoid lost profits from lost sales due to disappointed customers $86,000
Avoid rework and spoilage 63,000
Avoid inspection of raw materials 57,000
Avoid warranty costs 15,000
(Requirements)
1. Classigy each cost as a prevention cost, an appraisal cost, an internal faliure cost, or an external failure cost.
2. Should Clason implement the new quality program? Give your reason.
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