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FINANCIAL ACCOUNTING

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

Cass Company has recorded the following information for the last six months of operations from its cost of quality system:

	Quarter 1	Quarter 2
Revenue	$ 790,000	$ 950,000
Costs
Warranty expense	$ 15,800	$ 15,000
Machine calibration	4,400	8,560
Customer returns (defects)	23,400	19,600
Material inspection on receiving dock	9,720	6,720
Waste	19,600	15,920
Quality testing equipment	19,300	12,900
Rework	2,880	4,850
Inspection before packaging	8,200	10,100
Training on testing equipment	6,800	10,200

Required:

Classify these items into prevention, appraisal, internal failure, or external failure costs.
Calculate the ratio of the prevention, appraisal, internal failure, and external failure costs to sales for Quarter 1 and Quarter 2

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Long-Term Performance Report Nabors Company had actual quality costs for the year ended June 30, 20x5, as given below. Prevention costs: Prototype inspection Vendor certification Total prevention costs Appraisal costs: Process acceptance Test labor Total Appraisal costs Internal failure costs: Retesting Rework Total internal failure costs External failure costs: Recalls Product liability Total external failure costs li Prevention costs: $ 310,000 Total prevention costs Appraisal costs: 620,000 $930,000 $325,000 370,000 $ 695,000 $ 192,500 385,000 $577,500 Total quality costs At the zero-defect state, Nabors expects to spend $387,500 on prototype inspection, $77,500 on vendor certification, and $45,000 on process acceptance. Assume sales to be $2,400,000. Required: $ 211,750 488,250 $ 700,000 $2,902,500 1. Prepare a long-range performance report for 20x5. Enter all answers as positive amounts. If the budget variance amount is unfavorable select "Unfavorable" in the last column of the…
Environmental Cost Report Verde Company reported operating costs of $56,000,000 as of December 31, 20x5, with the following environmental costs: Testing for contamination $ 672,000 Inspecting products 1,008,000 Treating toxic waste 2,352,000 Obtaining ISO 14001 certification 840,000 Designing processes 784,000 Cleaning up oil spills 4,200,000 Maintaining pollution equipment 1,008,000 Cleaning up contaminated soil 6,216,000 Required: 1. Prepare an environmental cost report, classifying costs by quality category and expressing each as a percentage of total operating costs. Round percentages to two decimal places, if rounding is required. For example, 5.79% would be entered as "5.79". Verde Company Environmental Cost Report For the Year Ended December 31, 20x5 Environmental Cost Total Environmental Cost Percentage of Operating Costs Prevention costs: $fill in the blank 6b95f0094fe707f_2 fill in the blank 6b95f0094fe707f_4 $fill in…
Long-Term Performance Report Nabors Company had actual quality costs for the year ended June 30, 20x5, as given below. Prevention costs: Prototype inspection $ 320,000 Vendor certification 640,000 Total prevention costs $ 960,000 Appraisal costs: Process acceptance $ 335,000 Test labor 380,000 Total Appraisal costs $ 715,000 Internal failure costs: Retesting $ 197,500 Rework 395,000 Total internal failure costs $ 592,500 External failure costs: Recalls $ 389,500 Product liability 532,500 Total external failure costs $ 922,000 Total quality costs $3,189,500 At the zero-defect state, Nabors expects to spend $400,000 on prototype inspection, $80,000 on vendor certification, and $75,000 on process acceptance. Assume sales to be $2,700,000. Required: Question Content Area 1. Prepare a long-range performance report for 20x5. Enter all answers as positive amounts. If the budget variance amount is…

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