Eagleson Company's quality cost report is to be based on the following data: Net cost of scrap Liability arising from defective products Warranty repairs and replacements Re-entering data because of keying errors Supplies used in testing and inspection Quality data gathering, analysis, and reporting Final product testing and inspection Test and inspection of in-process goods Systems development $ 75,000 $ 32,000 $ 80,000 $ 75,000 $ 18,000 $ 62,000 $ 21,000 $ 44,000 $ 45,000 What would be the total prevention cost appearing on the quality cost report?

Eagleson Company's quality cost report is to be based on the following data: Net cost of scrap Liability arising from defective products Warranty repairs and replacements Re-entering data because of keying errors Supplies used in testing and inspection Quality data gathering, analysis, and reporting Final product testing and inspection Test and inspection of in-process goods Systems development $ 75,000 $ 32,000 $ 80,000 $ 75,000 $ 18,000 $ 62,000 $ 21,000 $ 44,000 $ 45,000 What would be the total prevention cost appearing on the quality cost report?

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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In response to intensive foreign competition, the management of Florex Company has attempted over the past year to improve the quality of its products. A statistical process control system has been installed and other steps have been taken to decrease the amount of warranty and other field costs, which have been trending upward over the past several years. Costs relating to quality and quality control over the last two years are given below: Inspection Quality engineering Depreciation of test equipment Rework labor Statistical process control Cost of field servicing Supplies used in testing. Systems development Warranty repairs Net cost of scrap Product testing Product recalls Disposal of defective products. Costs (in thousands) This Year Last Year $ 810 $ 1,152 $ 540 $ 810 $ 675 $ 270 $1,170 $1,440 $45 $ 630 $ 3,870 $ 630 $ 990 $ 2,610 $ 900 $ 1,890 $405 $ 1,260 $63 $ 900 $1,710 $ 1,260 $ 1,440 $ 1,080 $ 900 Sales have been flat over the past few years, at $90,000,000 per year. A…
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