Cost of qualityEljah Electronics makes wireless headphone sets. The firm produced 67,500 wireless headphone sets during its first year of operation. At year-end, it had no inventory of finished goods. Elijah sold63,450 units through regular market channels, but 675 of the units produced were so defective that they had to be sold as scrap. The remaining units were reworked and sold as seconds. For theyear, the firm spent $360,000 on prevention costs and $180,000 on quality appraisal. There were no customer returns. An income statement for the year followsSalesRegular channelSecondsScrapCost of goods sold$12.690,000320625Original production costsRework costsQuality prevention and appraisal23.625 $13,034.250$4,314.60094,500540.000 $44100Gross margin$8.085.150Seling and administrative expenses (all fixed)2205,000Profit before income taxes$5.500,150a Compute the total pre-tax profit lost by the company in its first year of operations by selling defective units as seconds or as scrap rather than selling the units through regular channels. $b. Compute the total failure cost for the company in its first year. Sc Compute total quality cost incurred by the company in its first year. S

Cost of quality Eljah Electronics makes wireless headphone sets. The firm produced 67,500 wireless headphone sets during its first year of operation. At year-end, it had no inventory of finished goods. Elijah solo 63,450 units through regular market channels, but 675 of the units produced were so defective that they had to be sold as scrap. The remaining units were reworked and sold as seconds. For the year, the firm spent $360,000 on prevention costs and $180,000 on quality appraisal. There were no customer returns. An income statement for the year follows Sales Regular channel Seconds Scrap Cost of goods sold Original production costs work costs Quality prevention and appraisal $12.690,000 320625 23.625 $13,034.250 Gross margin Seling and administrative expenses (all fixed) 14314600 94,500 540.000 $4449100 $8.085.150 2,205,000 $5.500,150 Profit before income taxes a Compute the total pre-tax profit lost by the company in its first year of operations by selling defective units as seconds or as scrap rather than selling the units through regular channels. $ b. Compute the total failure cost for the company in its first year. S cCompute total quality cost incurred by the company in its first year. S

Cost of quality Eljah Electronics makes wireless headphone sets. The firm produced 67,500 wireless headphone sets during its first year of operation. At year-end, it had no inventory of finished goods. Elijah solo 63,450 units through regular market channels, but 675 of the units produced were so defective that they had to be sold as scrap. The remaining units were reworked and sold as seconds. For the year, the firm spent $360,000 on prevention costs and $180,000 on quality appraisal. There were no customer returns. An income statement for the year follows Sales Regular channel Seconds Scrap Cost of goods sold Original production costs work costs Quality prevention and appraisal $12.690,000 320625 23.625 $13,034.250 Gross margin Seling and administrative expenses (all fixed) 14314600 94,500 540.000 $4449100 $8.085.150 2,205,000 $5.500,150 Profit before income taxes a Compute the total pre-tax profit lost by the company in its first year of operations by selling defective units as seconds or as scrap rather than selling the units through regular channels. $ b. Compute the total failure cost for the company in its first year. S cCompute total quality cost incurred by the company in its first year. S

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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