Long-Term Performance Report Nabors Company had actual quality costs for the year ended June 30, 20x5, as given below. Prevention costs: Prototype inspection $ 320,000 Vendor certification 640,000 Total prevention costs $ 960,000 Appraisal costs: Process acceptance $ 335,000 Test labor 380,000 Total Appraisal costs $ 715,000 Internal failure costs: Retesting $ 197,500 Rework 395,000 Total internal failure costs $ 592,500 External failure costs: Recalls $ 389,500 Product liability 532,500 Total external failure costs $ 922,000 Total quality costs $3,189,500 At the zero-defect state, Nabors expects to spend $400,000 on prototype inspection, $80,000 on vendor certification, and $75,000 on process acceptance. Assume sales to be $2,700,000. 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 $ 320,000 Vendor certification 640,000 Total prevention costs $ 960,000 Appraisal costs: Process acceptance $ 335,000 Test labor 380,000 Total Appraisal costs $ 715,000 Internal failure costs: Retesting $ 197,500 Rework 395,000 Total internal failure costs $ 592,500 External failure costs: Recalls $ 389,500 Product liability 532,500 Total external failure costs $ 922,000 Total quality costs $3,189,500 At the zero-defect state, Nabors expects to spend $400,000 on prototype inspection, $80,000 on vendor certification, and $75,000 on process acceptance. Assume sales to be $2,700,000. 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

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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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

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

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Prevention costs:
Prototype inspection	$ 320,000
Vendor certification	640,000
Total prevention costs	$ 960,000
Appraisal costs:
Process acceptance	$ 335,000
Test labor	380,000
Total Appraisal costs	$ 715,000
Internal failure costs:
Retesting	$ 197,500
Rework	395,000
Total internal failure costs	$ 592,500
External failure costs:
Recalls	$ 389,500
Product liability	532,500
Total external failure costs	$ 922,000
Total quality costs	$3,189,500