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 5BE
To determine
Determine the inspection activity cost of total production both before and after improvement.
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Process Activity Analysis
Roen Company incurred an activity cost of $105,600 for inspecting 40,000 units of production. Management determined that
the inspecting objectives could be met without inspecting every unit. Therefore, rather than inspecting 40,000 units of
production, the inspection activity was limited to a random selection of 5,000 units out of the 40,000 units of production.
Determine the inspection activity cost per unit on 40,000 units of total production both before and after the improvement. If
required, round per unit amounts to the nearest cent.
Inspection activity before improvement
per unit
2.64
Inspection activity after improvement
0.3 x per unit
Prawitt Company incurred an activity cost of $103,500 for inspecting 30,000 units of production. Management determined that the inspecting objectives could be met without inspecting every unit. Therefore, rather than inspecting 30,000 units of production, the inspection activity was limited to a random selection of 4,000 units out of the 30,000 units of production.
Determine the inspection activity cost per unit on 30,000 units of total production both before and after the improvement. If required, round per unit amounts to the nearest cent.Inspection activity before improvement fill in the blank 1 of 2$ per unitInspection activity after improvement fill in the blank 2 of 2$ per unit
Red Company reported sales of $8,100,000 in 2010. At the end of the year, the following quality costs were reported: Design review $405,000; Recalls 135,000; Reinspection 67,500; Materials inspection 54,000; Quality training 135,000; Process acceptance 67,500; Scrap 47,250; Lost sales 270,000; Product inspection 40,500; Returned goods 128,250.
REQUIRED:
1.Compute for the total external failure costs
2.compute for the total prevention costs.
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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- Roen Company incurred an activity cost of $117,300 for inspecting 46,000 units of production. Management determined that the inspecting objectives could be met without inspecting every unit. Therefore, rather than inspecting 46,000 units of production, the inspection activity was limited to a random selection of 4,600 units out of the 46,000 units of production. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below. Open spreadsheet Determine the inspection activity cost per unit on 46,000 units of total production both before and after the improvement. Do not round intermediate calculations. If required, round per unit amounts to the nearest cent. Inspection activity before improvement: $ per unit Inspection activity after improvement: $ per unitarrow_forwardAt the beginning of the year, Kowalski Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years: Preceding Year Current Year Sales $3,000,000 $3,000,000 Quality training 3,000 4,500 Material inspections 7,500 12,000 Scrap 60,000 45,000 Rework 120,000 75,000 Product inspection 15,000 30,000 Product warranty 105,000 82,500 If quality costs had been reduced to 2.5 percent of sales in the current year, profits would have increased by a.$174,000. b.$91,500. c.$37,500. d.$255,000.arrow_forwardAssume that the equivalent-unit cost of a spoiled unit is $8. Compute the amount of potential savings if all spoilage were eliminated, assuming that all other costs would be unaffected. Comment on your answer.arrow_forward
- At the beginning of the year, Devonshire Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years: Preceding Year Current Year Sales $2,400,000 $2,400,000 Quality training 30,000 48,000 Material inspections 7,000 8,000 Scrap 48,000 30,000 Rework 60,000 48,000 Product inspection 10,000 12,000 Product warranty 36,000 24,000 For the current year, appraisal costs are what percentage of sales? a.0.500% b.0.333% c.3.333% d.0.833%arrow_forwardThis is an ungraded practice assignment: Assume Sherwin-Williams Company, a large paint manufacturer, has determined the following activity cost pools and cost driver levels for the latest period: Activity Cost Pool Activity Cost Activity Cost Driver Machine setup $1,010,000 2,500 setup hours Material handling 880,000 5,000 material moves Machine operation 200,000 20,000 machine hours The following data are for the production of single batches of two products, Mirlite and Subdue: Mirlite Subdue Gallons produced 50,000 30,000 Direct labor hours 400 250 Machine hours 800 250 Direct labor cost $13,000 $10,500 Direct materials cost $410,000 $210,000 Setup hours 15 12 Material moves 60 35 Determine the batch and unit costs per gallon of Mirlite and Subdue using ABC.Round cost per gallon to two decimal places. Product Costs Mirlite Subdue Direct materials Answer Answer Direct labor Answer Answer…arrow_forwardHepworth Company has implimented a JIT system and is considering the use of backflush costing. Hepworth had the following transcations for the current fiscal year 1.Purchased raw materials on account for $600,000 2.Placed all materials recieved into production 3. Incurrec actual direct labor costs of $90,000 4. Incurred actual overhead costs of $625,000 5.Applied conversion costs of $675,000 6. Completed all work for the month 7.Sold all completed work 8.Computed the difference between actual and applied costs. Required: 1.Prepare the journal entries for traditional and backflush costing, For backflush costing, assume there are two trigger point (1) The purchase of raw materials and (2) The completion of the goods 3.What if there is only one trigger poin and its is (a) completion of the goods or b) sale of the goods? How would the backflush-costing journal entries differ from requirement 1 for (a) and (b)?arrow_forward
- Sheridan Manufacturing has recently tried to improve its analysis for its manufacturing process. Units started into production equalled 2500 and ending Work in Process inventory equalled 800 units. Sheridan had no beginning Work in Process inventory. Conversion costs are applied equally throughout production, and direct materials are applied at the beginning of the process. How much is the material cost per unit if ending Work in Process inventory was 20% complete and total material costs equalled $11000 if the weighted - average method is used? Rounded to the nearest cent. Select answer from the options below $4.40 $ 26.47 $32.94 $6.47arrow_forwardM&M had the following production data for the month of July 2021: Work in process, beginning- 2,000 units Started during the period- 90,000 units Spoiled units- 8,000 units Work in Process, ending- 6,000 units Materials are added at the beginning of the process. As to conversion cost, the beginning WIP was 80% incomplete and ending Work In process was 70% completed. Spoilage is detected at the end of the process. What is the equivalent of units for July 2021 for conversion cost?arrow_forwardHepworth Company has implemented a JIT system and is considering the use of backflush costing. Hepworth had the following transactions for the current fiscal year: 1. Purchased raw materials on account for $600,000.2. Placed all materials received into production. 3. Incurred actual direct labor costs of $90,000.4. Incurred actual overhead costs of $625,000.5. Applied conversion costs of $675,000.6. Completed all work for the month.7. Sold all completed work.8. Computed the difference between actual and applied costs.Required:1. Prepare the journal entries for traditional and backflush costing. For backflush costing,assume there are two trigger points: (1) the purchase of raw materials, and (2) the completion of the goods. 2. Assume the second trigger point in Requirement 1 is the sale of goods. What would changefor the backflush-costing journal entries?3. What if there is only one trigger point and it is (a) completion of the goods or (b) sale of the goods?How would the…arrow_forward
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