Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Textbook Question
Chapter 27, Problem 1CMA
Leese Inc. has the following quality financial data for its most recent fiscal year.
The total amount of prevention costs that should be reported in a cost of quality report for the year is:
- a. $390,000.
- b. $450,000.
- c. $690,000.
- d. $755,000.
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Walton Company measured its quality costs for the past two years and summarized those costs using the four categories shown
below:
Prevention costs
Appraisal costs
Internal failure costs
External failure costs
Required:
Last Year
This Year
$ 389,100
$ 669,500
$ 467,300
$ 545,000
$ 837,400
$ 465,000
$ 1,100,000
$ 612,000
1. Calculate the total cost of quality last year and this year.
2. For last year, calculate the cost in each of the four categories as a percent of the total cost of quality.
3. For this year, calculate the cost in each of the four categories as a percent of the total cost of quality.
4-a. Calculate the change in total cost of quality over the two-year period.
4-b. Is performance trending in a favorable or unfavorable direction?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Required 3 Required 4A Required 4B
Calculate the total cost of quality last year and this year.
Total cost of quality
Last Year
This Year
Walton Company measured its quality costs for the past two years and summarized those costs using the four categories shown
below:
Prevention costs
Appraisal costs
Internal failure costs
External failure costs
Last Year
$ 324,900
$ 409,400
$ 869,000
$ 1,188,000
This Year
$ 689,000
$ 545,000
$ 550,000
$ 673,200
Required:
1. Calculate the total cost of quality last year and this
year.
2. For last year, calculate the cost in each of the four categories as a percent of the total cost of quality.
3. For this year, calculate the cost in each of the four categories as a percent of the total cost of quality.
4-a. Calculate the change in total cost of quality over the two-year period.
4-b. Is performance trending in a favorable or unfavorable direction?
Walton Company has measured its quality costs for the past two years. After the company gathers its quality cost data, it summarizes
those costs using the four categories shown below:
Prevention costs
Appraisal costs
Internal failure costs
External failure costs
Last Year
$ 353,400
$ 445,000
$ 766,300
$ 1,034,000
Required:
1. Calculate the total cost of quality last year and this year.
2. For last year, calculate the cost in each of the four categories as a percent of the total cost of quality.
3. For this year, calculate the cost in each of the four categories as a percent of the total cost of quality.
4-a. Calculate the change in total cost of quality over the two-year period.
4-b. Is performance trending in a favorable or unfavorable direction?
Required 1 Required 2
This Year
$ 611,000
$ 528,700
$ 550,000
$ 714,000
Complete this question by entering your answers in the tabs below.
Favorable
OUnfavorable
Required 3 Required 4A Required 4B
Is performance trending in a favorable or…
Chapter 27 Solutions
Financial And Managerial Accounting
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- 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_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_forwardWalton Company has measured its quality costs for the past two years. After the company gathers its quality cost data, it summarizes those costs using the four categories shown below: Prevention costs Appraisal costs Internal failure costs External failure costs Last Year $ 357,000 $ 445,000 $ 790,000 $ 1,100,000 This Year $ 650,000 $ 545,000 $ 500,000 $ 680,000 Required: 1. Calculate the total cost of quality last year and this year. 2. For last year, calculate the cost in each of the four categories as a percent of the total cost of quality. 3. For this year, calculate the cost in each of the four categories as a percent of the total cost of quality. 4-a. Calculate the change in total cost of quality over the two-year period. 4-b. Is performance trending in a favorable or unfavorable direction? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4A Required 48 Calculate the change in total cost of quality over the two-year…arrow_forward
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