Costs of quality, quality improvement. iCover produces bags for carrying laptop computers. iCover sells 1,000,000 units each year at a price of $20 per unit and a contribution margin of 40%. To respond to customer complaints, iCover's mangers want to modify the production processes to pro- duce higher-quality products. The current costs of quality are as follows: Prevention costs $400,000 Appraisal costs $150,000 Internal failure costs Rework $325,000 Scrap $ 75,000 External failure costs Product repair costs $400,000 Lost sales from customer returns $650,000 The management accountant has forecast the following additional costs to modify the production process. Design changes Process engineering $125,000 $210,000

Q: What are some management techniques in cost management

A: Cost Management refers to the practice of estimating, recording and closely the monitoring the costs…

Q: Why do managers consider Direct Coasts to be more accurate than Indirect  Costs?  How do managers…

A: Direct costs are the costs which are directly identifiable in the manufacturing process.  Indirect…

Q: Explain the difference between price-takers and price-setters.

A: When a company cannot dictate prices then it is known as price taker. On the contrary, when a…

Q: Explain the meaning of the cost of quality and the classification of the cost of quality

A: Cost accounting system is a framework that guides the firm to calculate their cost and helps in…

Q: What is cost-plus pricing? Who uses it?

A:

Q: Cost behavior Costs Value Chain O Cost drivers

A: Answer: Cost behavior is defined as the changing nature of cost dependent on any units. Costs are of…

Q: What does ROI measure?

A: Return on Investment: Return on Investment is a profitability measure which determines a company's…

Q: What is variable costing? How does it differ from absorpotion costing? Which can better be used to…

A: Variable Costing is a costing method where variable expenses change in proportion with production.…

Q: What is cost-plus pricing?

A: Cost plus pricing is a method in the cost accounting to fix the selling price of the product.

Q: Why do engineers need cost data?

A: The question is based on the concept of cost in engineering projects.

Q: Explanation of the meaning of the target costing ?

A: Cost accounting system is a framework that guides the firm to calculate their cost and helps in…

Q: Critically evaluate the concept and application of marginal costing

A: Concept of marginal costing: Marginal cost is the difference between total costs increasing or…

Q: Define recruiting and what are its representative cost driver?

A: Recruiting:Recruiting is the process of hiring qualified employees to make them work for the…

Q: What is an opportunity cost and why should it be included when making decisions?

A: Opportunity costs is the costs of next best alternative foregone by accepting current alternative.…

Q: What variable affecting gross profit should the manager focus his attention? Why?

A: Gross Profit is the profit arrived at by deducting cost of goods sold from the turnover or the…

Q: What questions should managers answer when considering special pricing orders?

A: Definition:   Special Pricing: When businesses get Special orders from its customers for bulk…

Q: Why opportunity cost is measured and relate with the evaluation of alternative, can it be an…

A: Cost or expenditure is the total amount spent by an individual, group and company to make a finished…

Q: role of the cost and its impact on profitability?

A: Costing is an important process that businesses use to determine the cost of producing goods and…

Q: What are the advantages and disadvantages of target pricing versus cost-based pricing?

A: Advantages of target pricing are as follows: It help in controlling in cost It provide profit with…

Q: ivity analysis, and how is it used with cost driver analysis to manage costs and increase profits?…

A: An organization might use activity analysis as a management tool to recognize and comprehend the…

Q: evolution  of Activity based costing?

A: Introduction:- Activity-based costing (ABC) is a cost accounting methodology that assigns overhead…

Q: Why would an external user like absorption costing?

A: Absorption costing is used for calculating per unit cost based on all costs including fixed overhead…

Q: What is cost management?

A: Cost: The amount paid to purchase the asset, install it, and put it into operations, is referred to…

Q: Define competitive disadvantage costs.

A:

Q: What is cost stickiness? Why do managers need to be aware of cost stickiness?

A:

Q: What is the cost-volume-profit analysis and how can it be used for decisin making

A: Cost-volume-profit (CVP) analysis is a financial management tool that helps businesses understand…

Q: How is cost-volume-profit analysis different from profit planning?

A: Cost Volume Profit Analysis - This is an Analysis which provides the details How it will Effect the…

Management by Exception

A manager’s job is a very tough one. A manager needs to look at the various areas of work and as a manager he has to look after two or more important jobs or activities at the same time for the growth of the business. In order to do all these things in an effective manner, a manager must adopt or practice different management styles and tactics.