Long-Term Performance Report Nabors Company had actual quality costs for the year ended June 30, 20x5, as given below. Prevention costs: Prototype inspection $ 380,000 Vendor certification 760,000 Total prevention costs $ 1,140,000 Appraisal costs: Process acceptance $ 395,000 Test labor 440,000 Total Appraisal costs $ 835,000 Internal failure costs: Retesting $ 227,500 Rework 455,000 Total internal failure costs $ 682,500 External failure costs: Recalls $ 293,750 Product liability 536,250 Total external failure costs $ 830,000 Total quality costs $3,487,500 At the zero-defect state, Nabors expects to spend $475,000 on prototype inspection, $95,000 on vendor certification, and $60,000 on process acceptance. Assume sales to be $3,000,000. 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 unfavorable select "Unfavorable" in the last column of the table. Select "Favorable" if it is favorable. Round percentage answers to two decimal places, if rounding is required. For example, 5.789% would be entered as "5.79". Enter "0" as the target cost amount if there would be no cost at the zero-defect state. Nabors CompanyLong-Range Performance ReportFor the Year Ended June 30, 20x5 blank Actual Costs Target Costs Budget Variance Favorable; or Unfavorable Prevention costs: blank blank blank blank $- Select - $- Select - $- Select - - Select - - Select - - Select - Total prevention costs $- Select - $- Select - $- Select - Appraisal costs: blank blank blank blank $- Select - $- Select - $- Select - - Select - - Select - - Select - Total appraisal costs $- Select - $- Select - $- Select - Internal failure costs: blank blank blank blank $- Select - - Select - $- Select - - Select - - Select - - Select - Total internal failure costs $- Select - - Select - $- Select - External failure costs: blank blank blank blank $- Select - - Select - $- Select - - Select - - Select - - Select - Total external failure costs $- Select - - Select - $- Select - Total quality costs $- Select - $- Select - $- Select - Percentage of sales - Select -% - Select -% - Select -% Question Content Area 2. Why are quality costs still present for the zero-defect state?
Long-Term Performance Report Nabors Company had actual quality costs for the year ended June 30, 20x5, as given below. Prevention costs: Prototype inspection $ 380,000 Vendor certification 760,000 Total prevention costs $ 1,140,000 Appraisal costs: Process acceptance $ 395,000 Test labor 440,000 Total Appraisal costs $ 835,000 Internal failure costs: Retesting $ 227,500 Rework 455,000 Total internal failure costs $ 682,500 External failure costs: Recalls $ 293,750 Product liability 536,250 Total external failure costs $ 830,000 Total quality costs $3,487,500 At the zero-defect state, Nabors expects to spend $475,000 on prototype inspection, $95,000 on vendor certification, and $60,000 on process acceptance. Assume sales to be $3,000,000. 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 unfavorable select "Unfavorable" in the last column of the table. Select "Favorable" if it is favorable. Round percentage answers to two decimal places, if rounding is required. For example, 5.789% would be entered as "5.79". Enter "0" as the target cost amount if there would be no cost at the zero-defect state. Nabors CompanyLong-Range Performance ReportFor the Year Ended June 30, 20x5 blank Actual Costs Target Costs Budget Variance Favorable; or Unfavorable Prevention costs: blank blank blank blank $- Select - $- Select - $- Select - - Select - - Select - - Select - Total prevention costs $- Select - $- Select - $- Select - Appraisal costs: blank blank blank blank $- Select - $- Select - $- Select - - Select - - Select - - Select - Total appraisal costs $- Select - $- Select - $- Select - Internal failure costs: blank blank blank blank $- Select - - Select - $- Select - - Select - - Select - - Select - Total internal failure costs $- Select - - Select - $- Select - External failure costs: blank blank blank blank $- Select - - Select - $- Select - - Select - - Select - - Select - Total external failure costs $- Select - - Select - $- Select - Total quality costs $- Select - $- Select - $- Select - Percentage of sales - Select -% - Select -% - Select -% Question Content Area 2. Why are quality costs still present for the zero-defect state?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter14: Quality And Environmental Cost Management
Section: Chapter Questions
Problem 4CE: Nabors Company had actual quality costs for the year ended June 30, 20x5, as given below. At the...
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Question
Long-Term Performance Report
Nabors Company had actual quality costs for the year ended June 30, 20x5, as given below.
| Prevention costs: | |
| Prototype inspection | $ 380,000 |
| Vendor certification | 760,000 |
| Total prevention costs | $ 1,140,000 |
| Appraisal costs: | |
| Process acceptance | $ 395,000 |
| Test labor | 440,000 |
| Total Appraisal costs | $ 835,000 |
| Internal failure costs: | |
| Retesting | $ 227,500 |
| Rework | 455,000 |
| Total internal failure costs | $ 682,500 |
| External failure costs: | |
| Recalls | $ 293,750 |
| Product liability | 536,250 |
| Total external failure costs | $ 830,000 |
| Total quality costs | $3,487,500 |
At the zero-defect state, Nabors expects to spend $475,000 on prototype inspection, $95,000 on vendor certification, and $60,000 on process acceptance. Assume sales to be $3,000,000.
Required:
Question Content Area
1. Prepare a long-range performance report for 20x5. Enter all answers as positive amounts. If the
| blank | Actual Costs | Target Costs | Budget Variance | Favorable; or Unfavorable |
| Prevention costs: | blank | blank | blank | blank |
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$- Select - | $- Select - | $- Select - |
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- Select - | - Select - | - Select - |
|
| Total prevention costs | $- Select - | $- Select - | $- Select - |
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| Appraisal costs: | blank | blank | blank | blank |
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$- Select - | $- Select - | $- Select - |
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|
|
- Select - | - Select - | - Select - |
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| Total appraisal costs | $- Select - | $- Select - | $- Select - |
|
| Internal failure costs: | blank | blank | blank | blank |
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$- Select - | - Select - | $- Select - |
|
|
|
- Select - | - Select - | - Select - |
|
| Total internal failure costs | $- Select - | - Select - | $- Select - |
|
| External failure costs: | blank | blank | blank | blank |
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$- Select - | - Select - | $- Select - |
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|
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- Select - | - Select - | - Select - |
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| Total external failure costs | $- Select - | - Select - | $- Select - |
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| Total quality costs | $- Select - | $- Select - | $- Select - |
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| Percentage of sales | - Select -% | - Select -% | - Select -% |
|
Question Content Area
2. Why are quality costs still present for the zero-defect state?
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