Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Chapter 13, Problem 4BE
To determine
Calculate the cost of quality report.
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Cost of Quality Report
A quality control activity analysis indicated the following four activity costs of a hotel:
Inspecting cleanliness of rooms
$283,800
Processing lost customer reservations
94,600
Rework incorrectly prepared room service meal
47,300
Employee training
47,300
Total
$473,000
Sales are $4,300,000. Prepare a cost of quality report. Round percent of sales to one decimal place.
Cost of Quality Report
Quality Cost
Percent of Total Percent of
Quality Cost
Classification
Quality Cost
Total Sales
Prevention
Appraisal
%
Internal failure
%
%
External failure
%
%
Total
%
Cost of Quality Report
A quality control activity analysis indicated the following four activity costs of a hotel:
Inspecting cleanliness of rooms
$167,400
Processing lost customer reservations
55,800
Rework incorrectly prepared room service meal
223,200
Employee training
111,600
Total
$558,000
Sales are $3,100,000. Prepare a cost of quality report. Round percent of sales to one decimal place.
Cost of Quality Report
Quality CostClassification
Quality Cost
Percent of TotalQuality Cost
Percent ofTotal Sales
Prevention
$fill in the blank 1
fill in the blank 2%
fill in the blank 3%
Appraisal
fill in the blank 4
fill in the blank 5%
fill in the blank 6%
Internal failure
fill in the blank 7
fill in the blank 8%
fill in the blank 9%
External failure
fill in the blank 10
fill in the blank 11%
fill in the blank 12%
Total
$fill in the blank 13
fill in the blank 14%
fill in the blank 15%
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.
Chapter 13 Solutions
Managerial Accounting
Ch. 13 - What is the benefit of the lean philosophy?Ch. 13 - Prob. 2DQCh. 13 - Prob. 3DQCh. 13 - Prob. 4DQCh. 13 - Prob. 5DQCh. 13 - Why would a lean manufacturer strive to produce...Ch. 13 - Prob. 7DQCh. 13 - Prob. 8DQCh. 13 - Prob. 9DQCh. 13 - Prob. 10DQ
Ch. 13 - Prob. 11DQCh. 13 - Prob. 12DQCh. 13 - Prob. 13DQCh. 13 - Prob. 1BECh. 13 - Prob. 2BECh. 13 - Prob. 3BECh. 13 - Prob. 4BECh. 13 - Prob. 5BECh. 13 - Prob. 1ECh. 13 - Prob. 2ECh. 13 - Lean principles Rag Swag Inc. manufactures various...Ch. 13 - Prob. 4ECh. 13 - Reduce setup time Vernon Inc. has analyzed the...Ch. 13 - Compute lead time Jackson Fabricators Inc....Ch. 13 - Calculate lead time Williams Optical Inc. is...Ch. 13 - Prob. 8ECh. 13 - Prob. 9ECh. 13 - Prob. 10ECh. 13 - Prob. 11ECh. 13 - Prob. 12ECh. 13 - Lean accounting Modern Lighting Inc. manufactures...Ch. 13 - Prob. 14ECh. 13 - Prob. 15ECh. 13 - Prob. 16ECh. 13 - Prob. 17ECh. 13 - Prob. 18ECh. 13 - Process activity analysis The Brite Beverage...Ch. 13 - Prob. 20ECh. 13 - Prob. 21ECh. 13 - Lean principles Bright Night, Inc., manufactures...Ch. 13 - Prob. 2PACh. 13 - Lean accounting Dashboard Inc. manufactures and...Ch. 13 - Pareto chart and cost of quality report for a...Ch. 13 - Prob. 1PBCh. 13 - Lead time Master Chef Appliance Company...Ch. 13 - Lean accounting Com-Tel Inc. manufactures and...Ch. 13 - Pareto chart and cost of quality report for a...Ch. 13 - Prob. 1MADCh. 13 - Prob. 2MADCh. 13 - Prob. 3MADCh. 13 - Prob. 4MADCh. 13 - Ethics in Action In August, Lannister Company...Ch. 13 - Prob. 3TIFCh. 13 - Prob. 1CMACh. 13 - Prob. 2CMACh. 13 - In measuring the cost of quality, which one of the...Ch. 13 - Prob. 4CMA
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- Quality Cost Report Loring Company had total sales of 2,400,000 for fiscal 20X1. The costs of quality-related activities are given below. Required: 1. Prepare a quality cost report, classifying costs by category and expressing each category as a percentage of sales. What message does the cost report provide? 2. Prepare a bar graph and pie chart that illustrate each categorys contribution to total quality costs. Comment on the significance of the distribution.arrow_forwardKang Company reported sales of 3,240,000 in 20x5. At the end of the calendar year, the following quality costs were reported: Required: 1. Prepare a quality cost report. 2. Prepare a graph (pie chart or bar graph) that shows the relative distribution of quality costs, and comment on the distribution.arrow_forwardQuality Cost Report Whitley Company had total sales of 1,000,000 for the year ending 20X1. The costs of quality are given below. Required: 1. Prepare a quality cost report, classifying costs by category and expressing each category as a percentage of sales. What message does the cost report provide? 2. Prepare a bar graph and pie chart that illustrate each categorys contribution to total quality costs. Comment on the significance of the distribution.arrow_forward
- Evans Company had total sales of 3,000,000 for fiscal 20x5. The costs of quality-related activities are given below. Required: 1. Prepare a quality cost report, classifying costs by category and expressing each category as a percentage of sales. What message does the cost report provide? 2. Prepare a bar graph and pie chart that illustrate each categorys contribution to total quality costs. Comment on the significance of the distribution. 3. What if, five years from now, quality costs are 7.5 percent of sales, with control costs being 65 percent of the total quality costs? What would your conclusion be?arrow_forwardBradshaw Company reported sales of 5,000,000 in 20X1. At the end of the fiscal year (June 30, 20X1), the following quality costs were reported: Required: 1. Prepare a quality cost report. 2. Prepare a graph (pie chart or bar graph) that shows the relative distribution of quality costs, and comment on the distribution. 3. Assuming sales of 5,000,000, by how much would profits increase if quality improves so that quality costs are only 3% of sales?arrow_forwardNabors Company had actual quality costs for the year ended June 30, 20x5, as given below. At the zero-defect state, Nabors expects to spend 375,000 on quality engineering, 75,000 on vendor certification, and 50,000 on packaging inspection. Assume sales to be 25,000,000. Required: 1. Prepare a long-range performance report for 20x5. What does this report tell the management of Nabors? 2. Explain why quality costs still are present for the zero-defect state. 3. What if Nabors achieves the zero-defect state reflected in the report? What are some of the implications of this achievement?arrow_forward
- Calculating and Using a Single Charging Rate The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include: Fixed costs (salaries, tools): $72,930 per year Variable costs (supplies): $1.30 per maintenance hour Estimated usage by: Assembly Department 4,900 Fabricating Department 6,200 Packaging Department 11.000 Total maintenance hours 22,100 Actual usage by: Assembly Department 3,425 Fabricating Department 6,300 Packaging Department 10,200 Total maintenance hours 19,925 Required: 1. Calculate a single charging rate for the Maintenance Department. Round your answer to the nearest cent. per maintenance hour 2. Use this rate to assign the costs of the Maintenance Department to the user departments based on actual usage. Calculate the total amount charged for maintenance for the year. 3. What if the Assembly Department used 4,000 maintenance hours in the year? How much would have been charged out to the three departments? when required, round your answers…arrow_forwardDraw a graph of the cost behavior for each of the following costs incurred by the Mountain Summit Hospital. The hospital measures monthly activity in patient days. Label both axes and the cost line in each graph.1. The cost of food varies in proportion to the number of patient days of activity. In January, the hospital provided 3,000 patient days of care, and food costs amounted to $24,000.2. The cost of salaries and fringe benefits for the administrative staff totals $12,000 per month.3. The hospital’s laboratory costs include two components: (a) $40,000 per month for compensation of personnel and depreciation on equipment and (b) $10 per patient day for chemicals and other materials used in performing the tests.4. The cost of utilities depends on how many wards the hospital needs to use during a particular month. During months with activity under 2,000 patient days of care, two wards are used, resulting in utility costs of $10,000. During months with greater than 2,000 patient days…arrow_forwardDetermining mixed costs—the high-low method 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 Use the high—low method to calculate the variable cost per inspection. Calculate the total fixed costs. Write the equation and calculate the operating costs for 1,000 inspections. 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.arrow_forward
- < Cost of Quality Report A quality control activity analysis indicated the following four activity costs of a hotel: Inspecting cleanliness of rooms Processing lost customer reservations Rework incorrectly prepared room service meal Employee training Total Sales are $3,000,000. Prepare a cost of quality report. Round percent of sales to one decimal place. Quality Cost Classification Prevention Appraisal Internal failure External failure Total $ $ Cost of Quality Report Quality Cost Percent of Total Quality Cost % % % % $132,000 33,000 66,000 99,000 $330,000 % Percent of Total Sales % % % % % O Previous Nearrow_forwardCost of Quality Report A quality control activity analysis indicated the following four activity costs of a hotel: Inspecting cleanliness of rooms Processing lost customer reservations Reworking incorrectly prepared room service meals Employee training Total $47,600 23,800 95,200 71,400 $238,000 Sales are $1,700,000. Prepare a cost of quality report. Round percent of sales to one decimal place. Quality Cost Classification Prevention Appraisal Internal failure External failure Total Cost of Quality Report Quality Cost Percent of Total Percent of Quality Cost Total Sales % % % % % % % % % %arrow_forwardPintura Company implemented a quality improvement program and tracked the following for the five years: By cost category as a percentage of sales for the same period of time: Required: 1. Prepare a bar graph that reveals the trend in quality cost as a percentage of sales (time on the horizontal axis and percentages on the vertical). Comment on the message of the graph. 2. Prepare a bar graph for each cost category as a percentage of sales. What does this graph tell you?arrow_forward
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