Costs of quality analysis. Adirondack Company makes chairs for outside living spaces. The com- pany has been working on improving quality over the last year and wants to evaluate how well it has done on costs-of-quality (Co0) measures. Here are the results: Annual COQ Report, Adirondack Company 2016 2017 Supplier evaluation Scrap Warranty repair costs Design engineering Inspection $ 5,000 $ 7,500 $ 9,980 $ 4,475 $ 3,500 $ 8,980 $ 39,435 $500,000 $ 5,500 $ 5,900 $ 7,960 $ 6,775 $ 4,600 $ 5,800 $ 36,535 $575,000 Rework Total CoQ Total Revenue

Costs of quality analysis. Adirondack Company makes chairs for outside living spaces. The com- pany has been working on improving quality over the last year and wants to evaluate how well it has done on costs-of-quality (Co0) measures. Here are the results: Annual COQ Report, Adirondack Company 2016 2017 Supplier evaluation Scrap Warranty repair costs Design engineering Inspection $ 5,000 $ 7,500 $ 9,980 $ 4,475 $ 3,500 $ 8,980 $ 39,435 $500,000 $ 5,500 $ 5,900 $ 7,960 $ 6,775 $ 4,600 $ 5,800 $ 36,535 $575,000 Rework Total CoQ Total Revenue

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 21E: At the end of 20x5, Bing Pharmaceuticals began to implement an environmental quality management...

See similar textbooks

Similar questions

Costs of quality analysis. Adirondack Company makes chairs for outside living spaces. The company has been working on improving quality over the last year and wants to evaluate how well it has done on costs-of-quality (COQ) measures. Here are the results:
Costs of quality. (CMA, adapted) Osborn, Inc., produces cell phone equipment. Amanda Westerly, Osborn’s president, implemented a quality-improvement program that has now been in operation for 2 years. The cost report shown here has recently been issued.
Cost of Quality and Value-Added/Non-Value-Added Reports for a Service Company Seven Seas Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Seven Seas are identified. Question Content Area a. Identify the cost of quality classification for each activity and whether the activity is value-added or non-value-added. Quality Control Activities Activity Cost Quality CostClassification VA/NVA Classification Billing error correction $60,000 fill in the blank 1 of 18 fill in the blank 2 of 18 Cable signal testing 140,000 fill in the blank 3 of 18 fill in the blank 4 of 18 Reinstalling service (installed incorrectly the first time) 40,000 fill in the blank 5 of 18 fill in the blank 6 of 18 Repairing satellite equipment 50,000 fill in the blank 7 of 18 fill in the blank 8 of 18 Repairing underground cable connections to the customer 25,000 fill in the blank 9 of 18 fill in the blank 10 of 18…
Classifying Costs of Quality Paul Miller, controller of Meta Medical, has reviewed the costs of quality records for the past years. Meta Medical provides calibration and maintenance services for sophisticated medical equipment in the Midwest. Training, testing, and service calls are major costs that seem to grow each year. Miller is trying to measure possible ways to reducing the total costs of quality as part of a review of all processes and activities within the firm. He assembled the following costs: Parts warranty, including replacement labor 92,000 Emergency trips to service client machines 86,000 Rental of substitute equipment to cover client downtime 43,000 Training of repair technicians (time and travel) 196,000 Inspection of finished repairs 45,000 Testing and certifications of calibration equipment 15,000 Development of client testing processes and diagnostics 31,500 Miller is aware of two contracts that were cancelled this past year because of client complaints about poor…
At the end of 20x5, Bing Pharmaceuticals began to implement an environmental quality management program. As a first step, it identified the following costs in its accounting records as environmentally related for the calendar year just ended: Required: 1. Prepare an environmental cost report by category. Assume that total operating costs are 150,000,000. 2. Use a pie chart to illustrate the relative distribution percentages for each environmental cost category. Comment on what this distribution communicates to a manager.
The management of Boogie Company thinks that its total costs of quality can be reduced by increasing expenditures in certain key costs of quality categories. The following costs of quality have been identified by management: Cost of Quality Rework Recalls Reengineering efforts Repair Replacements Retesting Supervision Scrap Training Testing of incoming materials Inspection of work in process Downtime Product liability insurance Quality audits Continuous improvement Warranty repairs Costs P 6.000.00 15,000.00 9.000.00 12.000.00 12.000.00 5.000.00 18,000.00 9,000.00 15.000.00 7.000.00 18,000.00 10,000.00 9,000.00 5.000.00 1000.00 15,000.00 Required: 1. Classify these costs into the four costs of quality categories 2. Determine the total pesos being spent on each of the categories 3. Based on the company's expenditures by cost of quality categories, on which cost category should the company concentrate its efforts to decrease its overall costs of quality?
Analyzing costs of quality Stella, Inc. is using, a costs-of-quality approach to evaluate design engineering efforts for a new skateboard. Stella’s senior managers expect the engineering work to reduce appraisal, internal failure and external failure activities. The predicted reductions in activities over the two-year life of the skateboards follow. Also shown are the predeter—mined overhead allocation rates for each activity. Requirements Calculate the predicted quality cost savings from the design engineering Work. Stella spent $103,000 on design engineering for the new skateboard. What is the net benefit of this “preventive” quality activity? What major difficulty would Stella’s managers have in implementing this costs-of-quality approach? What alternative approach could they use to measure quality improvement?
XYZ Company made expenditures for the following: Costs in activities aimed at obtaining new knowledge P 10,000 Cost of developing and producing a prototype model 3,000 Cost of testing the prototype model for safety and environmental friendliness 30,000 Cost of revising designs for flaws in the prototype model 10,000 Salaries of employees, consultants and technicians involved in R and D 20,000 Marketing research to study consumer tastes 5,000 Advertising to establish recognition of the newly developed product 30,000 Cost of conference for the introduction of the newly developed product including fee of a model hired as endorser How much is recognized as research and development expense? _____________
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: Activities Activity Cost Billing error correction $60,000 Cable signal testing 140,000 Reinstalling service (installed incorrectly the first time) 40,000 Repairing satellite equipment 50,000 Repairing underground cable connections to the customer 25,000 Replacing old technology cable with higher quality cable 175,000 Replacing old technology signal switches with higher quality switches 150,000 Responding to customer home repair requests 30,000 Training employees 80,000 Total 750,000 Prepare a Pareto chart of these activities.
Cost Estimation; Machine Replacement; Ethics Hardison Inc. manufactures glass for officebuildings in Florida. As a result of age and wear, a critical machine in the production process hasbegun to produce quality defects. Hardison is considering replacing the old machine with a newmachine, either brand A or brand B. The manufacturer has provided Hardison with the following dataon the costs of operation of each machine brand at various levels of output:Output(square yards)Brand AEstimated Total CostsBrand BEstimated Total Costs2,000 $ 97,000 $ 120,0004,000 125,000 160,0008,000 180,000 200,00016,000 225,000 260,00032,000 280,000 300,00064,000 438,000 368,000Required1. Graph the data for the two brands of machines.2. Use the high-low method to determine the cost equation for each brand of machine and use the results tocalculate the costs of operating each machine if Hardison’s output is expected to be 25,000 square yards
A lean manufacturer reports the following quality costs. Prepare a cost of quality report. $ 50,000 Training machine operators Product recalls 20,000 12,000 18,000 $ 100,000 Scrap of defective products Inspecting finished goods Total Prevention Appraisal Quality Category Internal failure External failure Total cost of quality Cost of Quality Report Cost Category Total % of Total Cost of Quality % % % de se % %
Cost of Quality Report Meagher Solutions Inc. manufactures memory chips for personal computers. An activity analysis was conducted, and the following activity costs were identified with the manufacture and sale of memory chips: a. Identify the cost of quality classification for each activity. Quality Activities Activity Cost Quality Cost Classification Correct shipment errors $150,000 Disposing of scrap 95,000 Emergency equipment maintenance 125,000 Employee training 50,000 Final inspection 80,000 Inspecting incoming materials 60,000 Preventive equipment maintenance 40,000 Processing customer returns 90,000 Scrap reporting 45,000 Supplier development 15,000 Warranty claims 250,000 Total $1,000,000 b. Prepare a cost of quality report. Assume that the sales for the period were $4,000,000. If required, round percents to one decimal place. Meagher Solutions Inc. Cost of Quality Report Quality…