In response to intensive foreign competition, the management of Florex Company has attempted over the past year to improve thequality of its products. A statistical process control system has been installed and other steps have been taken to decrease the amountof warranty and other field costs, which have been trending upward over the past several years. Costs relating to quality and qualitycontrol over the last two years are given below:Costs (in thousands)LastThisYearYear$ 1,584InspectionQuality engineeringDepreciation of test eguipment765540675630225$ 1,260$ 1,620225Rework laborStatistical process controlCost of field servicing$ 1,7101,17081Supplies used in testingSystems developmentWarranty repairsNet cost of scrapProduct testingProduct recalls456309001,260244,1401,530$ 1,440990540900$ 2,700900Disposal of defective products900Sales have been flat over the past few years, at $90,000,000 per year. A great deal of money has been spent in the effort to upgradequality, and management is anxious to see whether or not the effort has been effective.Required:1. Prepare a quality cost report that contains data for both this year and last year. (Enter amount values in thousands. Round yourpercentage answers to 2 decimal places (i.e 0.1234 should be entered as 12.34).)Florex CompanyQuality Cost ReportLast YearThis YearAmount (inthousands)Percent ofSalesAmount (inthousands)Percent ofSalesPrevention costs:Total prevention costsAppraisal costsTotal appraisal costsInternal failure costs:Total intemal failure costsExternal failure costs:Total external failure costsTotal quality cost

Step 1: Cost report is a financial report, which identifies cost and charges to various activities.…

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. Costs (in thousands) Last This Year Year 765 $ 1,584 540 $ Inspection Quality engineering Depreciation of test equipment Revork labor Statistical process control Cost of field servicing 675 $ 630 $ 225 $ 1,260 $ 1,620 225 $ 1,710 $ 1,170 Supplies used in testing Systems development Warranty repairs Net cost of scrap Product testing 45 81 900 630 $ 4,140 540 $ 1,260 $ 1,530 $ 1,440 990 900 $ 2,700 $ 900 Product recalls Disposal of defective products 900 Sales have been flat over the past few years, at $90,000,000 per year. A great deal of money has been spent in the effort to upgrade quality, and management is anxious to see whether or not the effort has been effective.

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. Costs (in thousands) Last This Year Year 765 $ 1,584 540 $ Inspection Quality engineering Depreciation of test equipment Revork labor Statistical process control Cost of field servicing 675 $ 630 $ 225 $ 1,260 $ 1,620 225 $ 1,710 $ 1,170 Supplies used in testing Systems development Warranty repairs Net cost of scrap Product testing 45 81 900 630 $ 4,140 540 $ 1,260 $ 1,530 $ 1,440 990 900 $ 2,700 $ 900 Product recalls Disposal of defective products 900 Sales have been flat over the past few years, at $90,000,000 per year. A great deal of money has been spent in the effort to upgrade quality, and management is anxious to see whether or not the effort has been effective.

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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