Exercise 10-58 (Algo) Trading-Off Costs of Quality (LO 10-7, 8) The following represents the financial information for Plaza Plastics for May and June: Sales revenue Costs Scrap Process inspection Quality training Product testing equipment Field testing Warranty repairs Rework Preventive maintenance Legal expense for warranty claims Materials inspection May $ 783,000 $ 2,060 2,940 23,840 5,240 8,480 3,440 19,840 16,280 7,880 11,360 June $ 576,000 $ 1,770 1,820 11,780 4,400 6,380 3,140 16,730 8,630 4,400 11, 240 Required: Construct a cost of quality report for May and June. Note: Input all amounts as positive numbers. Round your percentage answers to 1 decimal place (i.e., .321 as 32.1).

Exercise 10-58 (Algo) Trading-Off Costs of Quality (LO 10-7, 8) The following represents the financial information for Plaza Plastics for May and June: Sales revenue Costs Scrap Process inspection Quality training Product testing equipment Field testing Warranty repairs Rework Preventive maintenance Legal expense for warranty claims Materials inspection May $ 783,000 $ 2,060 2,940 23,840 5,240 8,480 3,440 19,840 16,280 7,880 11,360 June $ 576,000 $ 1,770 1,820 11,780 4,400 6,380 3,140 16,730 8,630 4,400 11, 240 Required: Construct a cost of quality report for May and June. Note: Input all amounts as positive numbers. Round your percentage answers to 1 decimal place (i.e., .321 as 32.1).

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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Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-1) Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Transactions IT Operations Direct cost IT From: Operations Transactions Transactions Total 8 18% 70% $ 310,000 IT Costs Operations S 250,000 $ 750,000 670,000 x 1,510,000 x Using Department Operations 8 8 8 $ $ 730,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. x Answer is complete but not entirely correct. Allocated to: Transactions 250,000 XS 2,233,333 x $ 8 30% 8 $ 1,570,000 $ 3,770,000 Retail 0X X $ Retail OX 0x 0 Commercial S 70% 30% 18% 833,333 X 0x 0 x 833,333 Commercial 30% 38% 28 $ 2,320,000
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Statement 1: Depreciation on equipment a company uses in its selling and administrative activities would be classified as a product cost. Statement 2: A publisher that sells its books trough agents who are paid a constant percentage commission on each book sold would classify the commissions as variable cost. Statement 3: The cost of goods manufacture is calculated by adding the amount of work-in-process at the end of the year to the cost of raw materials used, direct labor worked, and manufacturing overhead incurred for the year and then subtracting work-in-process at the beginning of the year. Statement 4: Variable cost per unit is unaffected by changes in activity. Statement 5: A cost is either direct or indirect. Direct is considered as a prime cost while indirect is considered a conversion cost. a. All statements are true d. Statements 1, 4 and 5 are true b. Statements 1, 3 and 5 are true e.Statements 2, 4 and 5 are true c.Statements 1, 2 and 4 are true f. Statements 2, 3 and 4…
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Applying Differential Analysis to Profitability Scenarios Assume that Company A and Company B sell a microwave popcorn popper for $20. Although the companies have different cost structures, both companies currently show a profit of $21,000 based on sales of 14,000 units as shown in the following financial statements for the month of June. Both companies hold no inventory and sell contractual orders in the month. For the Month of June Company A Company B Sales ($20) $280,000 $280,000 Variable cost of goods sold ($5.00, 7.50, Company A and B, respectively) 70,000 105,000 Variable selling and administrative costs ($2.00, $4.00, Company A and B, respectively) 28,000 56,000 Contribution margin 182,000 119,000 Fixed cost of goods sold 105,000 70,000 Fixed selling and administrative costs 56,000 28,000 Profits Before-Tax $21,000 $21,000 For each company, determine the impact on monthly profit using differential analysis for each of the following separate scenarios.1.…
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