The following represents the financial information for Domingo Corporation for two months. March April Sales revenue $ 515,000 $ 420,000 Costs Process inspection $ 1,750 $ 1,910 Scrap 1,830 1,880 Quality training 18,800 13,900 Warranty repairs 4,200 4,600 Product testing equipment 6,700 7,000 Customer complaints 2,600 3,700 Rework 16,000 18,500 Preventive maintenance 12,600 10,300 Materials inspection 6,500 4,500 Field testing 9,900 11,700 Required: a. Classify these items into Prevention, Appraisal, Internal failure, or External failure costs. b. Calculate the ratio of the prevention, appraisal, internal failure, and external failure costs to sales for March and April.
The following represents the financial information for Domingo Corporation for two months. March April Sales revenue $ 515,000 $ 420,000 Costs Process inspection $ 1,750 $ 1,910 Scrap 1,830 1,880 Quality training 18,800 13,900 Warranty repairs 4,200 4,600 Product testing equipment 6,700 7,000 Customer complaints 2,600 3,700 Rework 16,000 18,500 Preventive maintenance 12,600 10,300 Materials inspection 6,500 4,500 Field testing 9,900 11,700 Required: a. Classify these items into Prevention, Appraisal, Internal failure, or External failure costs. b. Calculate the ratio of the prevention, appraisal, internal failure, and external failure costs to sales for March and April.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 10-50 (Algo) Costs of Quality (LO 10-7, 8)
The following represents the financial information for Domingo Corporation for two months.
| March | April | |||||
| Sales revenue | $ | 515,000 | $ | 420,000 | ||
| Costs | ||||||
| Process inspection | $ | 1,750 | $ | 1,910 | ||
| Scrap | 1,830 | 1,880 | ||||
| Quality training | 18,800 | 13,900 | ||||
| Warranty repairs | 4,200 | 4,600 | ||||
| Product testing equipment | 6,700 | 7,000 | ||||
| Customer complaints | 2,600 | 3,700 | ||||
| Rework | 16,000 | 18,500 | ||||
| Preventive maintenance | 12,600 | 10,300 | ||||
| Materials inspection | 6,500 | 4,500 | ||||
| Field testing | 9,900 | 11,700 | ||||
Required:
a. Classify these items into Prevention, Appraisal, Internal failure, or External failure costs.
b. Calculate the ratio of the prevention, appraisal, internal failure, and external failure costs to sales for March and April.
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