Stahman, Inc., estimates its hidden external failure costs using the Taguchi loss function.Stahlman produces plastic sheets that vary in thickness and grade. For one of its large-volumeproducts, it was determined that k 1⁄4 $30,000 and T 1⁄4 0.28 inches in diameter. A sample of fourunits produced the following values: Unit No. Actual Diameter (y) 1 0.28 2 0.30 3 0.26 4 0.27 Required:1. Calculate the average loss per unit.2. Assuming that 100,000 units were produced, what is the total hidden cost?3. Assume that the multiplier for Stahman’s hidden external failure costs is six. What are themeasured external costs? Explain the difference between measured costs and hidden costs.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Stahman, Inc., estimates its hidden external failure costs using the Taguchi loss function.
Stahlman produces plastic sheets that vary in thickness and grade. For one of its large-volume
products, it was determined that k 1⁄4 $30,000 and T 1⁄4 0.28 inches in diameter. A sample of four
units produced the following values:
Unit No. Actual Diameter (y)
1 0.28
2 0.30
3 0.26
4 0.27
Required:
1. Calculate the average loss per unit.
2. Assuming that 100,000 units were produced, what is the total hidden cost?
3. Assume that the multiplier for Stahman’s hidden external failure costs is six. What are the
measured external costs? Explain the difference between measured costs and hidden costs.
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