Muning Corporation has a used a traditional accounting system to apply quality control costs uniformly to all products at a rate of P20 per direct labor hour. The average monthly direct labor hours for its main products are 9,600 hours. Muning wants to shift to ABC system in order to allocate quality control costs to its product in a more equitable manner. To start with, the process value analysis was conducted. Quality control activities were determined, as well as the appropriate cost drivers and cost driver rates. The analysis yielded the following: Activity Cost Driver Rate Quantity for Main Product Inspection of materials deliveries Inspections of goods in process Final inspection before delivery of finished goods Classes of materials P500 per class 10 per unit 20 classes Number of units 12,000 units Number of orders 200 per order 100 orders The quality control cost that would be assigned to the main products using traditional costing system а. 120,000 b. 150,000 с. 192,000 d. 240,000

Muning Corporation has a used a traditional accounting system to apply quality control costs uniformly to all products at a rate of P20 per direct labor hour. The average monthly direct labor hours for its main products are 9,600 hours. Muning wants to shift to ABC system in order to allocate quality control costs to its product in a more equitable manner. To start with, the process value analysis was conducted. Quality control activities were determined, as well as the appropriate cost drivers and cost driver rates. The analysis yielded the following: Activity Cost Driver Rate Quantity for Main Product Inspection of materials deliveries Inspections of goods in process Final inspection before delivery of finished goods Classes of materials P500 per class 10 per unit 20 classes Number of units 12,000 units Number of orders 200 per order 100 orders The quality control cost that would be assigned to the main products using traditional costing system а. 120,000 b. 150,000 с. 192,000 d. 240,000

Name: Muning Corporation has a used a traditional accounting system to appl
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Description: Muning Corporation has a used a traditional accounting system to apply quality control costsuniformly to all products at a rate of P20 per direct labor hour. The average monthly direct laborhours for its main products are 9,600 hours.Muning wants to

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter14: Quality And Environmental Cost Management

Section: Chapter Questions

Problem 6CE: Pinter Company had the following environmental activities and product information: 1. Environmental...

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In 20X1, Don Blackburn, president of Price Electronics, received a report indicating that quality costs were 31% of sales. Faced with increasing pressures from imported goods. Don resolved to take measures to improve the overall quality of the companys products. After hiring a consultant in 20X1, the company began an aggressive program of total quality control. At the end of 20X5, Don requested an analysis of the progress the company had made in reducing and controlling quality costs. The accounting department assembled the following data: Required: 1. Compute the quality costs as a percentage of sales by category and in total for each year. 2. Prepare a multiple-year trend graph for quality costs, both by total costs and by category. Using the graph, assess the progress made in reducing and controlling quality costs. Does the graph provide evidence that quality has improved? Explain. 3. Using the 20X1 quality cost relationships (assume all costs are variable), calculate the quality costs that would have prevailed in 20X4. By how much did profits increase in 20X4 because of the quality improvement program? Repeat for 20X5.
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Susan Mills, Company B's chief accountant, has developed an automated costing system that helps track the cost of production activities. This system is capable of accurately measuring and allocating post-manufacturing activities, such as selling, promotional, and distribution activities, in such a way that Company B gets a more detailed view of its product costs. One of the benefits of this system is that it allows Company B to determine which product lines are more profitable When Susan implemented the new costing system, she realized that the company's current period profits would increase significantly if the new product cost information was used for inventory valuation on the financial statements. Susan has been under intense pressure to improve the company's profits, and this would be a quick and effective way for her to help meet the company's short-term profit goals. As a result, Susan has decided to use the automated costing system to determine the company's profits. 1. Why…
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