Semi-Annual C0Q Report, Osborn, Inc. (in thousands) 6/30/2016 12/31/2016 6/30/2017 12/31/2017 Prevention costs Machine maintenance $ 480 $ 480 $ 440 $ 290 Supplier training Design reviews Total prevention costs Appraisal costs Incoming inspections Final testing Total appraisal costs Internal failure costs 21 90 45 35 30 218 198 196 531 788 683 521 109 124 89 55 327 327 302 202 436 451 391 257 Rework 226 206 166 115 Scrap Total internal failure costs 127 124 68 65 353 330 234 180 External failure costs Warranty repairs 182 89 70 67 Customer returns 594 510 263 186 Total external failure costs 776 599 333 253 Total quality costs Total revenues $1,641 $9,260 $2,096 $2,168 $1,211 $8,220 $9,180 $9,050 Required 1. For each period, calculate the ratio of each COQ category to revenues and to total quality costs. 2. Based on the results of requirement 1, would you conclude that Osborn's quality program has been successful? Prepare a short report to present your case. 3. Based on the 2015 survey, Amanda Westerly believed that Osborn had to improve product quality. In making her case to Osborn management, how might Westerly have estimated the opportunity cost of not implementing the quality-improvement program?

Semi-Annual C0Q Report, Osborn, Inc. (in thousands) 6/30/2016 12/31/2016 6/30/2017 12/31/2017 Prevention costs Machine maintenance $ 480 $ 480 $ 440 $ 290 Supplier training Design reviews Total prevention costs Appraisal costs Incoming inspections Final testing Total appraisal costs Internal failure costs 21 90 45 35 30 218 198 196 531 788 683 521 109 124 89 55 327 327 302 202 436 451 391 257 Rework 226 206 166 115 Scrap Total internal failure costs 127 124 68 65 353 330 234 180 External failure costs Warranty repairs 182 89 70 67 Customer returns 594 510 263 186 Total external failure costs 776 599 333 253 Total quality costs Total revenues $1,641 $9,260 $2,096 $2,168 $1,211 $8,220 $9,180 $9,050 Required 1. For each period, calculate the ratio of each COQ category to revenues and to total quality costs. 2. Based on the results of requirement 1, would you conclude that Osborn's quality program has been successful? Prepare a short report to present your case. 3. Based on the 2015 survey, Amanda Westerly believed that Osborn had to improve product quality. In making her case to Osborn management, how might Westerly have estimated the opportunity cost of not implementing the quality-improvement program?

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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