Versatile Electrics manufactures electrical instruments for a variety of purposes. The following coste, related to maintaining product quality, were incurred in May: Inspection of electrical components purchased from outside suppliers $24 000 Costs of rework on faulty instruments 38 000 Replacement of instruments already sold that were still covered by warranty 85 000 Costs of defective parts that cannot be salvaged 12 200 Training of quality control inspectors 10 000 Tests of instruments before sales 20 000 Required: 1. Prepare a cost of quality report similar to the report chown in Exhibit 16.11. 2. How do you think management should react to the relative size of the four categories of quality costs? think that Vor vninin

Versatile Electrics manufactures electrical instruments for a variety of purposes. The following coste, related to maintaining product quality, were incurred in May: Inspection of electrical components purchased from outside suppliers $24 000 Costs of rework on faulty instruments 38 000 Replacement of instruments already sold that were still covered by warranty 85 000 Costs of defective parts that cannot be salvaged 12 200 Training of quality control inspectors 10 000 Tests of instruments before sales 20 000 Required: 1. Prepare a cost of quality report similar to the report chown in Exhibit 16.11. 2. How do you think management should react to the relative size of the four categories of quality costs? think that Vor vninin

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 following data is from Star Production Systems: Activity Activity Cost Correcting invoice errors $10,000 Disposing of poor-quality incoming materials. 15,000 Disposing of scrap 28,000 Final inspections 25,000 Responding to customer complaints 15,000 Inspecting incoming materials 17,500 Preventative machine maintenance 15,000 Warranty work 25,000 As a recent business graduate (with a special love for accounting), Star Production has asked you to analyze their activity costs and make recommendations for improvement. Using the data above, create a Cost of Quality Report and suggest activity areas that should be investigated further by the company.…
Assume that Pearle Vision uses standard costs to control the materials in its made-to-order sunglasses. The standards call for 3 ounces of material for each pair of lenses. The standard cost per ounce of material is $12. During July, the Santa Clara location produced 6,000 pairs of sunglasses and used 17,750 ounces of materials. The cost of the materials during July was $12.25 per ounce, and there were no beginning or ending inventories. Note: Round answers to the nearest whole number, when needed. Required a. Determine the flexible budget materials cost for the completion of the 6,000 pairs of glasses. $ b. Determine the actual materials cost incurred for the completion of the 6,000 pairs of glasses and compute the total materials variance. $ actual materials cost $ ✰ total materials variance c. How much of the total variance was related to the price paid to purchase the materials? $ ÷ d. How much of the difference between the answers to requirements (a) and (b) was related to the…
Dura-Conduit Corporation manufactures plastic conduit that is used in the cable industry.A conduit is a tube that encircles and protects the underground cable. In the process for making the plastic conduit, called extrnsio11, the melted plastic (resin) is pressed through a die to form a tube.Scrap is produced in this process. Information from the cost of production reports for three months is as follows, assuming that inventory remains constant: Assume that there is one-half pound of 1·esin per foot of the finished product. Determine the resin materials cost per foot of finished product for each Round to the nearest whole cent. Determine the ratio of the number of resin pounds output in conduit by the number of pounds input into the process for each month. Round percentages to one decimal pl Interpret the resin materials cost per foot for the three months.Use the information in (a) and (b) to explain what is happening. Determine the conversion cost per foot of finished product…
W Corporation assembles handheld computers. Each handheld computer takes six hours to assemble. The following data are for August 2018: Direct materials purchased $2,650,000 Conversion costs incurred $450,000 Direct materials used $2,500,000 Conversion costs allocated $500,000 W records direct materials purchased and conversion costs incurred at actual costs. It has no direct materials variances. When finished goods are sold, the backflush costing system “pulls through” standard direct material cost ($100 per unit) and standard conversion cost ($20 per unit). W produced 25,000 finished units in August 2018 and sold 24,500 units. The actual direct material cost per unit in August 2018 was $100, and the actual conversion cost per unit was $19. Required 1- Assume W uses a JIT production system and a backflush costing system with three trigger points: _ Purchase of direct materials and incurring of conversion costs _ Completion of good finished units of product _ Sale of finished…
Harbortown Marine Products (HMP) manufactures and sells various fixtures for boat cabins. One fixture uses a specialized fitting that is not used in any other HMP product. The management of HMP has considered outsourcing the fitting for several years but has never identified a suitable supplier. HMP has collected the following data on the cost of the fitting: Materials $ 6.45 Labor 4.85 Manufacturing overhead 14.45 Total $ 25.75 Rivard Fittings, a local auto supplier, contacts HMP and tells them that because of the loss of one of Rivard's customers, there is enough capacity to produce up to 5,000 units of the fitting monthly. Rivard has offered to sell HMP any quantity (up to 5,000 units monthly) at a price of $20.15 per fitting. If Rivard supplies all of the 3,020 fittings currently produced by HMP, HMP will avoid all of the variable overhead associated with the fitting and one-third of the fixed overhead. Management estimates that variable overhead for the fitting is…
The manager of Trusty Car Inspection reviewed the monthly operating costs for the past year. The costs ranged from $4,300 for 1,300 inspections to $3,900 for 900 inspections. Requirements 1. Use the high-low method to calculate the variable cost per inspection. 2. Calculate the total fixed costs. 3. Write the equation and calculate the operating costs for 1,000 inspections. 4. Draw a graph illustrating the total cost under this plan. Label the axes, and show the costs at 900, 1,000, and 1,300 inspections.
Golden Enterprise performs market research for consumer product companies across the country. The company conducts telephone surveys and gathers consumers together in focus groups to review foods, cleaning products, and toiletries. Golden uses a normal-costing system. General overhead is allocated to each job based on 150% of direct labor cost. Actual overhead equaled applied overhead as of April 30, 2020. Actual overhead in May was RM122,000. All costs incurred during the planning stage for a market research job and during the job are gathered in a balance sheet account called “Jobs in Progress (JIP).” When a job is completed, the costs are transferred to an income statement account called “Cost of Completed Jobs (CCJ).” Following is cost information for May 2020: From Beginning JIP Incurred in May Brand Labor General Overhead Labor Choco Jar RM18,000 RM27,000 RM16,000 Herbal Toothpaste 4,000 6,000 34,000 Green Noodles ---…
Zee-Drive Ltd. is a computer manufacturer. One of the items they make is monitors. Zee-Drive has the opportunity to purchase 19,000 monitors from an outside supplier for $211 per unit. One of the company's cost-accounting interns prepared the following schedule of Zee-Drive's cost to produce 19,000 monitors: Total cost of producing 19,000 monitors Unit cost Direct materials $ 2,204,000 $116 Direct labor 1,330,000 70 Variable factory overhead 665,000 35 Fixed manufacturing overhead 570,000 30 Fixed non-manufacturing overhead 722,000 38 $ 5,491,000 $ 289 You are asked to look over the intern's estimate before the information is shared with members of management who will decide to continue to make the monitors or buy them. The company's controller believes that the estimate may be incorrect because it includes costs that are not relevant. If Zee-Drive buys the monitors, the direct labor force currently employed in producing the monitors will be terminated and there would be no termination…
During the current year, Pitt Company incurred costs to develop and produce a routine, low-risk computer software product. 1,300,000 Completion of detailed program design Costa incurred for coding and testing to establish technological feasibility Other coding costs after establishment of technological feasibility Other testing costs after establishment of technological feasibility Costs of producing product masters for training materials Duplication of computer software and training materials from product masters (1,000 units) Packaging product (500 units) 1,000,000 2,400,000 2,000,000 1,500,000 2,500,000 1. In the year-end statement of financial position, what amount should be reported in inventory? a. 2,500,000 b. 3,400,000 c. 4,000,000 d. 4,900,000 2. What total amount of the costs incurred should be expensed immediately? a. 8,200,000 b. 2,300,000 c. 6,700,000 d. 4,400,000 3. In the year-end statement of financial position, what amount should be capitalized as software cost? a.…
The president of Mission Inc. has been concerned about the growth in costs over the last several years. The president asked the controller to perform an activity analysis to gain a better insight into these costs. The activity analysis revealed the following: Activities Activity Cost Correcting invoice errors $8,500 Disposing of income materials with poor quality 16,000 Disposing of scrap 28,500 Expediting late production 21,500 Final inspection 19,000 Inspecting incoming materials 5,000 Inspecting work in process 25,000 Preventive machine maintenance 15,000 Producing product 95,500 Responding to customer quality complaints 15,000 Total 249,000 The production process is complicated by quality problems, requiring the production manager to expedite production and dispose of scrap. Prepare a Pareto chart of the company activities. Classify the activities into prevention, appraisal, internal failure,…
(Defective units and rework) Plastico produces plastic pipe to customer specifications. Losses of less than 5 per cent are considered normal because they are inherent in the production process. The company applies overhead to products using machine hours. PlastiCo used the following information in setting its predetermined OH rate for 2010: Expected overhead other than rework $850,000 Expected rework costs 75,000 Total expected overhead $925,000 Expected machine hours for 2010 100,000 During 2010, the following production and cost data were accumulated: 2,000,000 feet of pipe 40,000 feet of pipe Total good production completed Total defects Ending inventory 75,000 feet of pipe Total cost of direct material for Job #B316 $687,100 Total cost of direct labor for Job #B316 $157,750 Total machine hours for Job #B316 3,080 Cost of reworking defects during 2010 $75,500 Total actual overhead cost for 2010 $862,000 a. Determine the overhead application rate for 2010. b. Determine the cost for…
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