Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Textbook Question
Chapter 27, Problem 16E
Cost of quality report
- A. Using the information in Exercise 15, identify the cost of quality classification for each activity.
- B. Prepare a cost of quality report. Assume sales for the period were $4,000,000. Round percentages to one decimal place.
- C. Interpret the cost of quality report.
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Cost of Quality and Value-Added/Non-Value-Added
Reports for a Service Company
Three Rivers Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Three Rivers are identified as follows:
a. Identify the cost of quality classification for each activity and whether the activity is value-added or non-value-added.
Value-Added/
Non-Value-Added
Classification
Quality Control Activities
Billing error correction
Cable signal testing
Reinstalling service (installed incorrectly the first
time)
Repairing satellite equipment
Repairing underground cable connections to the
customer
Replacing old technology cable with higher
quality cable
Replacing old technology signal switches with
higher quality switches
Responding to customer home repair requests
Training employees
Total activity cost
Activity
Cost
$35,400
108,800
76,000
34,000
23,000
151,400
173,000
42,400
36,000
$680,000
Quality Cost
Classification
Max
Cost of Quality and Value-Added/Non-Value-Added Reports for a Service Company
Three Rivers Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Three Rivers are identified as follows:
a. Identify the cost of quality classification for each activity and whether the activity is value-added or non-value-added.
Value-Added/
Activity Quality Cost
Non-Value-Added
Quality Control Activities
Cost
Classification
Classification
Billing error correction
$46,200
Cable signal testing
115,500
Reinstalling service (installed incorrectly the first
99,300
time)
Repairing satellite equipment
46,200
Repairing underground cable connections to the
30,000
customer
Replacing old technology cable with higher quality
158,500
cable
Replacing old technology signal switches with
181,100
higher quality switches
Responding to customer home repair requests
55,500
Training employees
37,700
Total activity cost
$770,000
Which of the following best defines the allocation base
Select one:
O a. It is selected based on the volume of cost
O b. It is a measure of activity used to allocate costs to a cost object
O c. It is changing on a monthly base
O d. It is chosen for each cost category
Chapter 27 Solutions
Financial And Managerial Accounting
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Ch. 27 - Prob. 11DQCh. 27 - What is the benefit of identifying non-value-added...Ch. 27 - In what ways can the cost of a process be...Ch. 27 - Lead time Blues Inc. manufactures jeans in the...Ch. 27 - Prob. 2BECh. 27 - Lean accounting The annual budgeted conversion...Ch. 27 - Cost of quality report A quality control activity...Ch. 27 - Process activity analysis Roen Company incurred an...Ch. 27 - Lean principles The chief executive officer (CEO)...Ch. 27 - Prob. 2ECh. 27 - Lean principles Rag Swag Inc. manufactures various...Ch. 27 - Lead time analysis Furry Friends Inc. manufactures...Ch. 27 - Reduce setup time Vernon Inc. has analyzed the...Ch. 27 - Compute lead time Jackson Fabricators Inc....Ch. 27 - Calculate lead time Williams Optical Inc. is...Ch. 27 - Suppy chain management The following is an excerpt...Ch. 27 - Employee involvement Quickie Designs Inc. uses...Ch. 27 - Lean principles for a restaurant The management of...Ch. 27 - Accounting issues in a lean environment Eon...Ch. 27 - Lean accounting Westgate Inc. uses a lean...Ch. 27 - Lean accounting Modern Lighting Inc. manufactures...Ch. 27 - Lean accounting Vintage Audio Inc. manufactures...Ch. 27 - Pareto chart Meagher Solutions Inc. manufactures...Ch. 27 - Cost of quality report A. Using the information in...Ch. 27 - Pareto chart for a service company Three Rivers...Ch. 27 - Cost of quality and value-added/non-value-added...Ch. 27 - Process activity analysis The Brite Beverage...Ch. 27 - Process activity analysis for a service company...Ch. 27 - Prob. 21ECh. 27 - Lean principles Bright Night, Inc., manufactures...Ch. 27 - Lead time Sound Tek Inc. manufactures electronic...Ch. 27 - Lean accounting Dashboard Inc. manufactures and...Ch. 27 - Pareto chart and cost of quality report for a...Ch. 27 - Prob. 1PBCh. 27 - Lead time Master Chef Appliance Company...Ch. 27 - Lean accounting Com-Tel Inc. manufactures and...Ch. 27 - Pareto chart and cost of quality report for a...Ch. 27 - Make a Decision Lean Performance for...Ch. 27 - Prob. 2MADCh. 27 - Prob. 3MADCh. 27 - Prob. 4MADCh. 27 - Ethics in Action In August, Lannister Company...Ch. 27 - Communication Ethan Fromme, the chief financial...Ch. 27 - Leese Inc. has the following quality financial...Ch. 27 - When measuring the cost of quality, the cost of...Ch. 27 - In measuring the cost of quality, which one of the...Ch. 27 - External failure costs include all of the...
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