A2 Hide Transcribed TextExercise 12-8 (Algo) Cost of Quality [LO12-2] Walton Company measured its quality costs for the past two years and summarized those costsusing the four categories shown below: Required: 1. Calculate the total cost of quality last year and this year. 2. For last year, calculate the costin 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 apercent 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 afavorable or unfavorable direction? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 4A Req 4B Calculatethe total cost of quality last year and this year.Complete this question by entering your answers in the tabs below.Req 1Req 2Req 3Req 4AReq 48Calculate the change in total cost of quality over the two-year period.Prevention and appraisal activitiesInternal and external failure costsThe total cost of quality Exercise 12-8 (Algo) Cost of Quality [LO12-2]Walton Company measured its quality costs for the past two years and summarized those costs using the four categories shownbelow:Prevention costsAppraisal costsInternal failure costsExternal failure costsRequired: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?Last Year$ 321,300$ 405,000$ 758,400$ 1,177,000Complete this question by entering your answers in the tabs below.Req 1This Year$ 591,500$ 528,700$ 450,000$734,499Reg 2Req 3Req 4Acalculate the total cost of quality last year and this year.Last YearThis YearTotal cost of quality< Req 1Req 4BReg 2 >

"Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Exercise 12-8 (Algo) Cost of Quality [LO12-2] Welton 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 $ 321,300 $ 405,000 $ 755,400 $ 1,177,000 This Year $ 591,500 $ 528,700 $ 450,000 $ 734,400 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?

Exercise 12-8 (Algo) Cost of Quality [LO12-2] Welton 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 $ 321,300 $ 405,000 $ 755,400 $ 1,177,000 This Year $ 591,500 $ 528,700 $ 450,000 $ 734,400 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?

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 13E: Gagnon Company reported the following sales and quality costs for the past four years. Assume that...

See similar textbooks

Similar questions

Exercise 12-8 (Algo) Cost of Quality [LO12-2] 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 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. Req 1 $ 378,400 $ 440,600 $ 813,700 $ 1,144,000 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. Req 2 Total cost of quality This Year $ 591,500 $ 550,500 $ 455,000 $ 652,800 Req 3 Calculate the total cost of quality last year and this year. Last Year Req 4A This Year
Exercise 12-8 (Algo) Cost of Quality [LO12-2] 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: 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. Last Year $ 321,300 $ 405,000 $ 758,400 $ 1,177,000 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? Req 1 Complete this question by entering your answers in the tabs below. This Year $ 591,500 $ 528,700 $ 450,000 $734,400 Req 2 Total cost of quality Req 3 Req 4A Calculate the total cost of quality last year and this year. Last Year This Year
In response to intensive foreign competition, the management of Florex Company has attempted over the past year to improve the quality of its products. A statistical process control system has been installed and other steps have been taken to decrease the amount of warranty and other field costs, which have been trending upward over the past several years. Costs relating to quality and quality control over the last two years are given below: Inspection Quality engineering Depreciation of test equipment Rework labor Statistical process control Cost of field servicing Supplies used in testing. Systems development Warranty repairs Net cost of scrap Product testing Product recalls Disposal of defective products. Costs (in thousands) This Year Last Year $ 810 $ 1,152 $ 540 $ 810 $ 675 $ 270 $1,170 $1,440 $45 $ 630 $ 3,870 $ 630 $ 990 $ 2,610 $ 900 $ 1,890 $405 $ 1,260 $63 $ 900 $1,710 $ 1,260 $ 1,440 $ 1,080 $ 900 Sales have been flat over the past few years, at $90,000,000 per year. A…
For the current year, prevention costs are what percentage of sales? For the current year, appraisal costs are what percentage of sales? 3.333% 0.833% 0.500% 0.875% If quality costs had been reduced to 2.5 percent of sales in the current year, profits would have increased by
All parts of question 3 Quality Improvement and Profitability Objective Gagnon Company reported the following sales and quality costs for the past four years. Assume that all quality costs are variable and that all changes in the quality cost ratios are due to a quality improvement program. Year Sales Revenues Quality Costs as aPercent of Revenues 1 $19,200,000 20% 2 20,800,000 17 3 24,320,000 13 4 25,420,000 9 Required: 1. Compute the quality costs for all four years. Quality Cost Year 1 $ Year 2 $ Year 3 $ Year 4 $ By how much did net income increase from Year 1 to Year 2 because of quality improvements?$ By how much did net income increase from Year 2 to Year 3 because of quality improvements?$ By how much did net income increase from Year 3 to Year 4 because of quality improvements?$ 2. The management of Gagnon Company believes it is possible to reduce quality costs to 2 percent of sales.…
Question 3 The Buffalo Machine Sdn. Bhd. was evaluating its cost structure relating to quality costs. Below items are the cost of quality in the year 2020. With this allocation of quality costs, the company lost 20% of sales due to poor performance. To improve the situation, the company would like to perform the cost of quality analysis. Items Product Reliability Test Process Quality Assurance Audit Rework Cost Production Inspection Supplier Quality System Audit Defect Repair Cost Market Defect Cost Sampling Inspection Quality Assurance Training Product Warranty Cost Cost/RM 10000 8500 12000 12000 5500 18000 80000 8000 16000 40000 a) Identify the items for prevention, appraisal, and failure costs. b) Compute the ratio of prevention, appraisal, and failure costs to total quality costs. c) Based on the analysis of the cost of quality, recommend the company's actions to improve the product quality.
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
Muskogee Company had sales of 60,000,000 in 20x1. In 20x5, sales had increased to 75,000,000. A quality improvement program was implemented at the beginning of 20x1. Overall conformance quality was targeted for improvement. The quality costs for 20x1 and 20x5 follow. Assume any changes in quality costs are attributable to improvements in quality. Required: 1. Compute the quality cost-to-sales ratio for each year. Is this type of improvement possible? 2. Calculate the relative distribution of costs by category for 20x1. What do you think of the way costs are distributed? (A pie chart or bar graph may be of some help.) How do you think they will be distributed as the company approaches a zero-defects state? 3. Calculate the relative distribution of costs by category for 20x5. What do you think of the level and distribution of quality costs? (A pie chart or bar graph may be of some help.) Do you think further reductions are possible? 4. The quality manager for Muskogee indicated that the external failure costs reported are only the measured costs. He argued that the 20x5 external costs were much higher than those reported and that additional investment ought to be made in control costs. Discuss the validity of his viewpoint. 5. Suppose that the manager of Muskogee received a bonus equal to 10 percent of the quality cost savings each year. Do you think that gainsharing is a good or a bad idea? Discuss the risks of gainsharing.
Quality Cost Report Loring Company had total sales of 2,400,000 for fiscal 20X1. 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.
Quality Cost Report Whitley Company had total sales of 1,000,000 for the year ending 20X1. The costs of quality 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.
Gagnon Company reported the following sales and quality costs for the past four years. Assume that all quality costs are variable and that all changes in the quality cost ratios are due to a quality improvement program. Required: 1. Compute the quality costs for all four years. By how much did net income increase from Year 1 to Year 2 because of quality improvements? From Year 2 to Year 3? From Year 3 to Year 4? 2. The management of Gagnon Company believes it is possible to reduce quality costs to 2.5 percent of sales. Assuming sales will continue at the Year 4 level, calculate the additional profit potential facing Gagnon. Is the expectation of improving quality and reducing costs to 2.5 percent of sales realistic? Explain. 3. Assume that Gagnon produces one type of product, which is sold on a bid basis. In Years 1 and 2, the average bid was 400. In Year 1, total variable costs were 250 per unit. In Year 3, competition forced the bid to drop to 380. Compute the total contribution margin in Year 3 assuming the same quality costs as in Year 1. Now, compute the total contribution margin in Year 3 using the actual quality costs for Year 3. What is the increase in profitability resulting from the quality improvements made from Year 1 to Year 3?
The controller of Emery, Inc. has computed quality costs as a percentage of sales for the past 5 years (20X1 was the first year the company implemented a quality improvement program). This information is as follows: Required: 1. Prepare a trend graph for total quality costs. Comment on what the graph has to say about the success of the quality improvement program. 2. Prepare a graph that shows the trend for each quality cost category. What does the graph have to say about the success of the quality improvement program? Does this graph supply more insight than the total cost trend graph does? 3. Prepare a graph that compares the trend in relative control costs versus relative failure costs. Comment on the significance of this trend.