Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 19, Problem 19.38P
1.
To determine
Quality:
Quality is the special trait possessed by a product that satisfies the needs and wants of the consumers of that product.
To determine: Decision making on purchase of gray cloth.
2.
To determine
Decision making on implementation of scrap reduction program.
3.
To determine
Decision making on implementation of scrap reduction program.
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Rupert’s Appliance Warehouse (RAW) delivers appliances to retailers throughout the city. The firm adds 6 percent to the cost of the appliances to cover the delivery cost. The delivery fee is meant to cover the cost of delivery. The finance team at RAW has analyzed the delivery service using activity-based costing methods and identified four activities. Data on these activities follow:
Activity
Cost Driver
Activity Cost
Cost Driver Volume
Processing order
Number of orders
$ 70,000
5,000
orders
Loading truck
Number of items
105,000
75,000
items
Delivering order
Number of orders
85,000
5,000
orders
Billing
Number of invoices
68,000
4,000
invoices
Total overhead
$ 328,000
Two of Rupert's customers are McLean Designs and Neveux Appliances. Data for orders and deliveries to these two customers follow:
McLean Designs
Neveux Appliances
Order value (total)
$ 72,000
$ 82,000
Number of orders
52
96
Total number of items
510
1,200
Number of invoices
12
90…
Rupert’s Appliance Warehouse (RAW) delivers appliances to retailers throughout the city. The firm adds 6 percent to the cost of the appliances to cover the delivery cost. The delivery fee is meant to cover the cost of delivery. The finance team at RAW has analyzed the delivery service using activity-based costing methods and identified four activities. Data on these activities follow:
Activity
Cost Driver
Activity Cost
Cost Driver Volume
Processing order
Number of orders
$ 84,000
6,000
orders
Loading truck
Number of items
290,000
145,000
items
Delivering order
Number of orders
102,000
6,000
orders
Billing
Number of invoices
85,000
5,000
invoices
Total overhead
$ 561,000
Two of Rupert's customers are McLean Designs and Neveux Appliances. Data for orders and deliveries to these two customers follow:
McLean Designs
Neveux Appliances
Order value (total)
$ 86,000
$ 96,000
Number of orders
66
236
Total number of items
900
1,600
Number of invoices
14
180…
CardioTrainer Equipment Company manufactures stationary bicycles and treadmills. The products are produced in the Fabrication and Assembly production departments. In addition to production activities, several other activities are required to produce the two products. These activities and their associated activity rates are as follows:
Activity
Activity Rate
Fabrication
$22 per machine hour (mh)
Assembly
$12 per direct labor hour (dlh)
Setup
$40 per setup
Inspecting
$18 per inspection
Production scheduling
$8 per production order
Purchasing
$5 per purchase order
The activity-base usage quantities and units produced for each product were as follows:
Stationary Bicycle
Treadmill
Machine hours
1,680
1,070
Direct labor hours
243
131
Setups
45
20
Inspections
158
94
Production orders
60
32
Purchase orders
240
98
Units produced
500
350
Use the activity rate and usage information to compute the total activity…
Chapter 19 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 19 - Describe two benefits of improving quality.Ch. 19 - Prob. 19.2QCh. 19 - Name two items classified as prevention costs.Ch. 19 - Give two examples of appraisal costs.Ch. 19 - Distinguish between internal failure costs and...Ch. 19 - Describe three methods that companies use to...Ch. 19 - Companies should focus on financial measures of...Ch. 19 - Give two examples of nonfinancial measures of...Ch. 19 - Give two examples of nonfinancial measures of...Ch. 19 - When evaluating alternative ways to improve...
Ch. 19 - Distinguish between customer-response time and...Ch. 19 - Prob. 19.12QCh. 19 - Give two reasons why delays occur.Ch. 19 - Companies should always make and sell all products...Ch. 19 - Prob. 19.15QCh. 19 - Rector Corporation is examining its quality...Ch. 19 - Six Sigma is a continuous quality improvement...Ch. 19 - Costs of quality. (CMA, adapted) Osborn, Inc.,...Ch. 19 - Costs of quality analysis. Adirondack Company...Ch. 19 - Costs-of-quality analysis. Safe Travel produces...Ch. 19 - Costs of quality, quality improvement. iCover...Ch. 19 - Prob. 19.22ECh. 19 - Prob. 19.23ECh. 19 - Waiting time. Its a Dogs World (IDW) makes toys...Ch. 19 - Waiting time, service industry. The registration...Ch. 19 - Waiting time, cost considerations, customer...Ch. 19 - Nonfinancial measures of quality and time. For the...Ch. 19 - Nonfinancial measures of quality, manufacturing...Ch. 19 - Statistical quality control. Harvest Cereals...Ch. 19 - Quality improvement, Pareto diagram,...Ch. 19 - Quality improvement, relevant costs, and relevant...Ch. 19 - Quality improvement, relevant costs, and relevant...Ch. 19 - Waiting times, manufacturing cycle times. The...Ch. 19 - Prob. 19.34PCh. 19 - Manufacturing cycle times, relevant revenues, and...Ch. 19 - Compensation linked with profitability, waiting...Ch. 19 - Ethics and quality. Weston Corporation...Ch. 19 - Prob. 19.38P
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