MANAGERIAL ACCOUNTING F/MGRS.
6th Edition
ISBN: 9781264100590
Author: Noreen
Publisher: RENT MCG
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Chapter 12, Problem 12.19P
1.
To determine
Introduction: A quality cost report shows a detailed description of prevention costs, appraisal costs, and the cost of internal and external failures that occurs due to the company’s current quality management efforts.
To prepare: The quality cost report of Company F.
2.
To determine
Introduction: The quality cost report can be used to evaluate the cost distribution in a particular year and increase or decrease in any cost component in the current year.
To prepare: A written evaluation to accompany the quality cost report.
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In response to intensive foreign competition, the management of Florex Company has attempted over the past year to improve the
quality of its products. A statistical process control system has been installed and other steps have been taken to decrease the amount
of warranty and other field costs, which have been trending upward over the past several years. Costs relating to quality and quality
control over the last two years are given below:
Costs (in thousands)
Last
This
Year
Year
$ 1,584
Inspection
Quality engineering
Depreciation of test eguipment
765
540
675
630
225
$ 1,260
$ 1,620
225
Rework labor
Statistical process control
Cost of field servicing
$ 1,710
1,170
81
Supplies used in testing
Systems development
Warranty repairs
Net cost of scrap
Product testing
Product recalls
45
630
900
1,260
24
4,140
1,530
$ 1,440
990
540
900
$ 2,700
900
Disposal of defective products
900
Sales have been flat over the past few years, at $90,000,000 per year. A great deal of money has been spent in…
Need the correct answers
In response to intensive foreign competition, the management of Florex Company has attempted over the past year to improve the
quality of its products. A statistical process control system has been installed and other steps have been taken to decrease the amount
of warranty and other field costs, which have been trending upward over the past several years. Costs relating to quality and quality
control over the last two years are given below:
Inspection
Quality engineering
Depreciation of test equipment
Rework labor
Statistical process control
Cost of field servicing
Supplies used in testing
Systems development
Warranty repairs
Costs (in thousands)
Last Year This Year
$ 660
$ 1,215
$ 300
$ 600
$ 300
$ 225
$ 900
$ 0
$ 300
$ 1,200
$ 30
$ 1,500
$ 1,050
$ 60
$ 750
Net cost of scrap
Product testing
ces
Product recalls
Disposal of defective products
$ 900
$ 3,375
$ 450
$ 1,110
$ 2,625
$ 1,350
$ 900
$ 1,350
$ 750
$ 750
$ 750
Sales have been flat over the past few years, at $75,000,000 per…
Chapter 12 Solutions
MANAGERIAL ACCOUNTING F/MGRS.
Ch. 12 - Prob. 12.1QCh. 12 - Prob. 12.2QCh. 12 - Prob. 12.3QCh. 12 - Prob. 12.4QCh. 12 - Prob. 12.5QCh. 12 - Prob. 12.6QCh. 12 - Prob. 12.7QCh. 12 - Prob. 12.8QCh. 12 - Prob. 12.9QCh. 12 - Prob. 12.10Q
Ch. 12 - Prob. 1AECh. 12 - Prob. 12.1ECh. 12 - Prob. 12.2ECh. 12 - Prob. 12.3ECh. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Prob. 12.6ECh. 12 - Prob. 12.7ECh. 12 - Prob. 12.8ECh. 12 - Scorecard Performance Measures LO 12–1, LO...Ch. 12 - Prob. 12.10ECh. 12 - Prob. 12.11ECh. 12 - Prob. 12.12PCh. 12 - Prob. 12.13PCh. 12 - Prob. 12.14PCh. 12 - Prob. 12.15PCh. 12 - Prob. 12.16PCh. 12 - Prob. 12.17PCh. 12 - Creating a Balanced Scorecard LO 12–4 Ariel Tax...Ch. 12 - Prob. 12.19PCh. 12 - Prob. 12.20PCh. 12 - Prob. 12.21C
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- In response to intense foreign competition, Florex Company has taken steps to improve the quality of its products. A summary of its quality costs (in thousands) over the past two years is given below: Inspection Quality engineering Depreciation of test equipment Rework labor Statistical process control Cost of field servicing Prevention costs: Total prevention costs Appraisal costs Total appraisal costs Internal failure costs: Total internal failure costs External failure costs: Costs (in thousands) Last Year This Year $ 630 $ 918 $ 540 $ 720 $ 180 Supplies used in testing Systems development Warranty repairs Net cost of scrap Product testing Product recalls $ 720 $ 990 $ 2,610 Disposal of production defects $ 900 Sales have been flat over the past few years, at $90,000,000 per year. Required: 1. Prepare a quality cost report for this year and last year. Note: Enter amount values in thousands. Round your percentage answers to 2 decimal places (i.e 0.1234 should be entered as 12.34).…arrow_forwardReturn on investment, Margin, Turnover Ready Electronics is facing stiff competition from imported goods. Its operating income margin has been declining steadily for the past several years. The company has been forced to lower prices so that it can maintain its market share. The operating results for the past 3 years are as follows. For the coming year, Ready's president plans to install a JIT purchasing and manufacturing system. She estimates that inventories will be reduced by 70 % during the first year of operations, producing a 20% reduction in the average operating assets of the company, which would remain unchanged without the JIT system.She also estimates that sales and operating income will be restored to Year 1 levels because of simultaneous reductions in operating expenses and selling prices. Lower selling prices will allow Ready to expand its market share.(Note : Round all numbers to two decimal places.) Required : 1. Compute the ROI, margin, and turnover for Years 1, 2…arrow_forwardStacy Cummins, the newly hired controller at Merced Home Products, Inc., was disturbed by what she haddiscovered about the standard costs at the Home Security Division. In looking over the past several yearsof quarterly income statements at the Home Security Division, she noticed that the first-quarter profits were always poor, the second-quarter profits were slightly better, the third- quarter profits were againslightly better, and the fourth quarter always ended with a spectacular performance in which the HomeSecurity Division managed to meet or exceed its target profit for the year. She also was concerned to findletters from the company’s external auditors to top management warning about an unusual use of standardcosts at the Home Security Division.When Ms. Cummins ran across these letters, she asked the assistant controller, Gary Farber, if he knewwhat was going on at the Home Security Division. Gary said that it was common knowledge in the companythat the vice president in charge…arrow_forward
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Inspection and Quality control in Manufacturing. What is quality inspection?; Author: Educationleaves;https://www.youtube.com/watch?v=Ey4MqC7Kp7g;License: Standard youtube license