The printing department is considering buying 10,000 additional rolls of gray cloth from an outside supplier at $2,000 per roll, which is much higher than Dover’s cost of weaving the roll. The printing department expects that 10% of the rolls obtained from the outside supplier will result in defective products. Should the printing department buy the gray cloth from the outside supplier? Show your calculations. Quality improvement. Dover Corporation makes printed cloth in two departments: weaving andprinting. Currently, all product first moves through the weaving department and then through the printingdepartment before it is sold to retail distributors for $2,800 per roll. Dover provides the following information:Weaving20,000 rollsPrinting30,000 rollsMonthly capacityMonthly productionDirect material cost per roll of cloth processed at each operationFixed operating costs19,000 rolls17,100 rolls$300$1,200$11,400,000$1,710,000Dover can start only 20,000 rolls of cloth in the weaving department because of capacity constraints of theweaving machines. Of the 20,000 rolls of cloth started in the weaving department, 1,000 (5%) defective rollsare scrapped at zero net disposal value. The good rolls from the weaving department (called gray cloth) aresent to the printing department. Of the 19,000 good rolls started at the printing operation, 1,900 (10%) defec-tive rolls are scrapped at zero net disposal value. The Dover Corporation's total monthly sales of printed clothequal the printing department's output.

Definition: Quality: Quality is the special trait possessed by a product that satisfies the needs…

Answered: Quality improvement. Dover Corporation…

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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The printing department is considering buying 10,000 additional rolls of gray cloth from an outside supplier at $2,000 per roll, which is much higher than Dover’s cost of weaving the roll. The printing department expects that 10% of the rolls obtained from the outside supplier will result in defective products. Should the printing department buy the gray cloth from the outside supplier? Show your calculations.

Quality improvement. Dover Corporation makes printed cloth in two departments: weaving and
printing. Currently, all product first moves through the weaving department and then through the printing
department before it is sold to retail distributors for $2,800 per roll. Dover provides the following information:
Weaving
20,000 rolls
Printing
30,000 rolls
Monthly capacity
Monthly production
Direct material cost per roll of cloth processed at each operation
Fixed operating costs
19,000 rolls
17,100 rolls
$300
$1,200
$11,400,000
$1,710,000
Dover can start only 20,000 rolls of cloth in the weaving department because of capacity constraints of the
weaving machines. Of the 20,000 rolls of cloth started in the weaving department, 1,000 (5%) defective rolls
are scrapped at zero net disposal value. The good rolls from the weaving department (called gray cloth) are
sent to the printing department. Of the 19,000 good rolls started at the printing operation, 1,900 (10%) defec-
tive rolls are scrapped at zero net disposal value. The Dover Corporation's total monthly sales of printed cloth
equal the printing department's output.

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