Process Activity AnalysisRoen Company incurred an activity cost of $105,600 for inspecting 40,000 units of production. Management determined thatthe inspecting objectives could be met without inspecting every unit. Therefore, rather than inspecting 40,000 units ofproduction, the inspection activity was limited to a random selection of 5,000 units out of the 40,000 units of production.Determine the inspection activity cost per unit on 40,000 units of total production both before and after the improvement. Ifrequired, round per unit amounts to the nearest cent.Inspection activity before improvementper unit2.64Inspection activity after improvement0.3 x per unit

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Answered: Process Activity Analysis Roen Company…

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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Environmental Cost Report Verde Company reported operating costs of $56,000,000 as of December 31, 20x5, with the following environmental costs: Testing for contamination $ 672,000 Inspecting products 1,008,000 Treating toxic waste 2,352,000 Obtaining ISO 14001 certification 840,000 Designing processes 784,000 Cleaning up oil spills 4,200,000 Maintaining pollution equipment 1,008,000 Cleaning up contaminated soil 6,216,000 Required: 1. Prepare an environmental cost report, classifying costs by quality category and expressing each as a percentage of total operating costs. Round percentages to two decimal places, if rounding is required. For example, 5.79% would be entered as "5.79". Verde Company Environmental Cost Report For the Year Ended December 31, 20x5 Environmental Cost Total Environmental Cost Percentage of Operating Costs Prevention costs: $fill in the blank 6b95f0094fe707f_2 fill in the blank 6b95f0094fe707f_4 $fill in…
Activity-Based Environmental Cost Assignments Pinter Company had the following environmental activities and product information: 1. Environmental activity costs Activity Costs Design products (to reduce pollution) $ 129,600 Test for contamination 230,400 Treat toxic waste 720,000 Operate pollution control equipment 576,000 2. Driver data Solvent X Solvent Y Design hours 2,900 1,900 Testing hours 5,100 7,700 Pounds of waste 600 15,400 Machine hours 2,900 61,100 3. Other production data Solvent X Solvent Y Nonenvironmental production costs $2,176,000 $4,128,000 Units produced 320,000 320,000 What if the design costs increased to $219,600 and the cost of toxic waste decreased to $360,000? Assume that Solvent Y uses 3,800 out of 7,600 design hours. Also assume that waste is cut by 50 percent and that Solvent Y is responsible for…
Due to the increased intensity of competition, the company is contemplating the activitybased costing method to help understand and control its costs better. The following are the costing and operating details collected for the pilot testing purpose. Material Handling QA Total Documentation $750,000 $1,100,000 $1,850,000 Fork Lift Truck Depreciation $500,000 $250,000 $750,000 Palletizing $1,250,000 - $1,250,000 Inspection - $650,000 $650,000 Total $2,500,000 $2,000,000 $4,500,000 Number of process checklist forms 7 17 13 37 Fork Lift Truck Hours 15 35 25 75 Number of pallets 25 145 80 250 Number of inspection hours 400 1,100 1,000 2,500 Question 1. Compute the activity-based cost allocated to all products. Would you recommend for the change to ABC? Explain
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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…
Process Activity Analysis Roen Company incurred an activity cost of $105,600 for inspecting 40,000 units of production. Management determined that the inspecting objectives could be met without inspecting every unit. Therefore, rather than inspecting 40,000 units of production, the inspection activity was limited to a random selection of 5,000 units out of the 40,000 units of production. Determine the inspection activity cost per unit on 40,000 units of total production both before and after the improvement. If reguired, round per unit amounts to the nearest cent. Inspection activity before improvement per unit Inspection activity after improvement per unit
In response to intense foreign competition, Florex Company has taken steps to improve the quality of its products. A summary of its quality costs (in thousands) over the past two years is given below: Inspection Quality engineering Depreciation of test equipment Rework labor Statistical process control Cost of field servicing Prevention costs: Total prevention costs Appraisal costs Total appraisal costs Internal failure costs: Total internal failure costs External failure costs: Costs (in thousands) Last Year This Year $ 630 $ 918 $ 540 $ 720 $ 180 Supplies used in testing Systems development Warranty repairs Net cost of scrap Product testing Product recalls $ 720 $ 990 $ 2,610 Disposal of production defects $ 900 Sales have been flat over the past few years, at $90,000,000 per year. Required: 1. Prepare a quality cost report for this year and last year. Note: Enter amount values in thousands. Round your percentage answers to 2 decimal places (i.e 0.1234 should be entered as 12.34).…
Prawitt Company incurred an activity cost of $103,500 for inspecting 30,000 units of production. Management determined that the inspecting objectives could be met without inspecting every unit. Therefore, rather than inspecting 30,000 units of production, the inspection activity was limited to a random selection of 4,000 units out of the 30,000 units of production. Determine the inspection activity cost per unit on 30,000 units of total production both before and after the improvement. If required, round per unit amounts to the nearest cent.Inspection activity before improvement fill in the blank 1 of 2$ per unitInspection activity after improvement fill in the blank 2 of 2$ per unit
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Nonvalue-Added Costs Lemmons Inc. has the following two activities: (1) Retesting reworked products, cost: $446,000. The retesting cost of the most efficient competitor is $225,000. (2) Welding subassemblies, cost: $1,080,000 (67,500 welding hours). A benchmarking study reveals that the most efficient level for Lemmons would use 54,000 welding hours and entail a cost of $864,000. Required: Determine the nonvalue-added cost of each activity. Nonvalue-added cost: Retesting $ 221,000 X Welding $216,000 ✓
Schedule of Activity Costs Quality Control Activities Product testing Assessing vendor quality Recalls Rework Scrap disposal Product design Training machine operators Warranty work Process audits Activity Cost $55,000 26,000 18,000 29,000 8,000 30,000 46,000 12,000 22,000 From the provided schedule of activity costs, determine the internal failure costs.

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