The Buffalo Machine Sdn. Bhd. was evaluating its cost structure relating to quality costs. Below items are the cost of quality in the year 2020. With this allocation of quality costs, the company lost 20% of sales due to poor performance. To improve the situation, the company would like to perform the cost of quality analysis. Items Product Reliability Test Process Quality Assurance Audit Rework Cost Production Inspection Supplier Quality System Audit Defect Repair Cost Market Defect Cost Sampling Inspection Quality Assurance Training Product Warranty Cost Cost/RM 10000 8500 12000 12000 5500 18000 80000 8000 16000 40000 a) Identify the items for prevention, appraisal, and failure costs. b) Compute the ratio of prevention, appraisal, and failure costs to total quality costs. c) Based on the analysis of the cost of quality, recommend the company's actions to improve the product quality.

The Buffalo Machine Sdn. Bhd. was evaluating its cost structure relating to quality costs. Below items are the cost of quality in the year 2020. With this allocation of quality costs, the company lost 20% of sales due to poor performance. To improve the situation, the company would like to perform the cost of quality analysis. Items Product Reliability Test Process Quality Assurance Audit Rework Cost Production Inspection Supplier Quality System Audit Defect Repair Cost Market Defect Cost Sampling Inspection Quality Assurance Training Product Warranty Cost Cost/RM 10000 8500 12000 12000 5500 18000 80000 8000 16000 40000 a) Identify the items for prevention, appraisal, and failure costs. b) Compute the ratio of prevention, appraisal, and failure costs to total quality costs. c) Based on the analysis of the cost of quality, recommend the company's actions to improve the product quality.

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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Walton Company has measured its quality costs for the past two years. After the company gathers its quality cost data, it summarizes those costs using the four categories shown below: Prevention costs Appraisal costs Internal failure costs Last Year $ 378,400 $ 440,600 This Year $ 591,500 $ 550,500 $ 813,700 $ 455,000 $ 1,144,000 $ 652,800 External failure costs Required: 1. Calculate the total cost of quality last year and this year. 2. For last year, calculate the cost in each of the four categories as a percent of the total cost of quality. 3. For this year, calculate the cost in each of the four categories as a percent of the total cost of quality. 4-a. Calculate the change in total cost of quality over the two-year period. 4-b. Is performance trending in a favorable or unfavorable direction? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4A Required 4B Calculate the total cost of quality last year and this year. Total…
Cost-of-Quality Improvement—Relevant Cost Analysis PIM Industries Inc. manufactureselectronics components. Each unit costs $30 before the final test. The final test rejects, on average,5% of the 50,000 units manufactured per year. The average rejection rate of the industry is 3%. A consultant has determined that poor lighting is the most likely cause of this high rejection rate. It wouldcost $100,000 to install adequate lighting in the assembly department, which would be useful for5 years. With adequate lighting (which will cost an additional $5,000 of operating costs per year), thefirm expects to reduce its rejection rate to no higher than the industry average.Required1. Should the firm install the lighting? That is, what would be the projected five-year impact on operatingprofit? (Show calculations.)2. What other considerations might affect this decision?3. What is the primary role of the management accountant in this decision context?
Walton Company measured its quality costs for the past two years and summarized those costs using the four categories shown below: Prevention costs Appraisal costs Internal failure costs External failure costs Last Year $ 324,900 $ 440,600 $734,700 $ 1,023,000 This Year $ 604,500 $ 517,800 $ 450,000 $ 727,600 Required: 1. Calculate the total cost of quality last year and this year. 2. For last year, calculate the cost in each of the four categories as a percent of the total cost of quality. 3. For this year, calculate the cost in each of the four categories as a percent of the total cost of quality. 4-a. Calculate the change in total cost of quality over the two-year period. 4-b. Is performance trending in a favorable or unfavorable direction?
Three Rivers Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Three Rivers are identified as follows: Question Content Areaa. Identify the cost of quality classification for each activity and whether the activity is value-added or non-value-added. Quality Control Activities Activity Cost Quality Cost Classification Value-Added/Non-Value-AddedClassificationBilling error correction $42,800 External failure Non-value-addedCable signal testing 117,300 Appraisal Non-value-addedReinstalling service (installed incorrectly the first time) 92,000 Internal failure Non-value-addedRepairing satellite equipment 20,700 Internal failure Non-value-addedRepairing underground cable connections to the customer 27,800 Internal failure Non-value-addedReplacing old technology cable with higher quality cable 142,000 Appraisal Value-addedReplacing old technology signal switches…
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Walton Company has measured its quality costs for the past two years. After the company gathers its quality cost data, it summarizes those costs using the four categories shown below: Prevention costs Appraisal costs Internal failure costs External failure costs Last Year $ 353,400 $ 445,000 $ 766,300 $ 1,034,000 Required: 1. Calculate the total cost of quality last year and this year. 2. For last year, calculate the cost in each of the four categories as a percent of the total cost of quality. 3. For this year, calculate the cost in each of the four categories as a percent of the total cost of quality. 4-a. Calculate the change in total cost of quality over the two-year period. 4-b. Is performance trending in a favorable or unfavorable direction? Required 1 Required 2 This Year $ 611,000 $ 528,700 $ 550,000 $ 714,000 Complete this question by entering your answers in the tabs below. Favorable OUnfavorable Required 3 Required 4A Required 4B Is performance trending in a favorable or…
For each year 2016 and 2017 Percentage of hours spent by each employee on quality training
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NUBD Company’s quality cost report is to be based on the following data: Disposal of defective products- 42,000 Supervision of testing and inspection activities- 73,000 Statistical process control activities- 78,000 Cost of field servicing and handling complaints- 53,000 Re-entering data because of keying errors- 46,000 Warranty repairs and replacements- 87,000 Supplies used in testing and inspection- 87,000 Quality circles- 27,000 Downtime caused by quality problems- 14,000 What would be the total appraisal cost appearing on the quality cost report?
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Otto Enterprises produces wind turbines. Use the list below to calculate the percent of appraisal cost of the total cost of quality. Equipment maintenance. Inspecting raw materials Product recalls Scrap of defective products Training lean business practices Warranty claims Total cost of quality $ 31,500 45,000 18,500 12,500 26,000 16,500 $ 150,000
ABC Company's quality cost report is to be based on the following data:What would be the total prevention cost appearing on the quality cost report? P75,000 P93,000 P145,000 P76,000