Management of Ellen Software Services (ESS) has recently implemented a TQM program to eliminate a serous level of "program bugs" that plagued its recent product releases. The following activities and their costs were taken from ESS's records. The data are for 2019 (the year prior to the TQM program) and 2021 (the year after the start of the TQM program). 2019 2021 100,000 Design documentation standards development Documentation of customer training process Documentation of changes to software Customer training Software testing - Customer site Software - testing - pre-release Telephone "on-line" customer problem support Software corrections and redesign Field "trouble shooting" for customer support Costs of Contract cancellations Revenues lost due to delivery date delays Training for systems designers/programmers Training for sales staff 0 0 5,000 100,000 130,000 50,000 90,000 50,000 140,000 180,000 0 100,000 10,000 20,000 20,000 130,000 80,000 140,000 60,000 20,000 80,000 30,000 120,000 250,000 80,000 Requirements: 1. Categorize the costs of quality for both years. 2. Evaluate the two years. Develop a scenario to explain the major differences in costs between the two years. In other words, what happened? 3. If 2019 showed an operating loss and 2021 showed a small operating profit, would this change your scenario in question no. 2 or confirm it? Explain.
Management of Ellen Software Services (ESS) has recently implemented a TQM program to eliminate a serous level of "program bugs" that plagued its recent product releases. The following activities and their costs were taken from ESS's records. The data are for 2019 (the year prior to the TQM program) and 2021 (the year after the start of the TQM program). 2019 2021 100,000 Design documentation standards development Documentation of customer training process Documentation of changes to software Customer training Software testing - Customer site Software - testing - pre-release Telephone "on-line" customer problem support Software corrections and redesign Field "trouble shooting" for customer support Costs of Contract cancellations Revenues lost due to delivery date delays Training for systems designers/programmers Training for sales staff 0 0 5,000 100,000 130,000 50,000 90,000 50,000 140,000 180,000 0 100,000 10,000 20,000 20,000 130,000 80,000 140,000 60,000 20,000 80,000 30,000 120,000 250,000 80,000 Requirements: 1. Categorize the costs of quality for both years. 2. Evaluate the two years. Develop a scenario to explain the major differences in costs between the two years. In other words, what happened? 3. If 2019 showed an operating loss and 2021 showed a small operating profit, would this change your scenario in question no. 2 or confirm it? Explain.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Management of Ellen Software Services (ESS) has recently implemented a TQM program to
eliminate a serous level of "program bugs" that plagued its recent product releases. The
following activities and their costs were taken from ESS's records. The data are for 2019 (the
year prior to the TQM program) and 2021 (the year after the start of the TQM program).
2019
2021
Design documentation standards development
100,000
Documentation of customer training process
20,000
Documentation of changes to software
5,000
20,000
Customer training
100,000
130,000
Software testing - Customer site
130,000
80,000
Software – testing – pre-release
50,000
140,000
Telephone "on-line" customer problem support
90,000
60,000
Software corrections and redesign
50,000
20,000
Field "trouble shooting" for customer support
140,000
80,000
Costs of Contract cancellations
180,000
30,000
Revenues lost due to delivery date delays
120,000
Training for systems designers/programmers
100,000
250,000
Training for sales staff
10,000
80,000
Requirements:
1. Categorize the costs of quality for both years.
2. Evaluate the two years. Develop a scenario to explain the major differences in costs
between the two years. In other words, what happened?
3. If 2019 showed an operating loss and 2021 showed a small operating profit, would this
change your scenario in question no. 2 or confirm it? Explain.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education