Otto Enterprises produces wind turbines. Use the list below to calculate the percent of appraisal cost of the total cost of quality. Equipment maintenance Inspecting raw materials Product recalls Scrap of defective products Training lean business practices Warranty claims Total cost of quality $ 31,500 45,000 18,500 12,500 26,000 16,500 $ 150,000

Otto Enterprises produces wind turbines. Use the list below to calculate the percent of appraisal cost of the total cost of quality. Equipment maintenance Inspecting raw materials Product recalls Scrap of defective products Training lean business practices Warranty claims Total cost of quality $ 31,500 45,000 18,500 12,500 26,000 16,500 $ 150,000

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11.2E: Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each...

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Exercise 4 (Cost of Quality Analysis, Nonfinancial Quality Measures) The Gabriel Corporation manufactures and sells industrial grinders. The following table presents financial information pertaining to quality in 20X3 and 20X4 (in thousands): 20X3 P10,000 110 250 100 60 20X4 P12,500 85 Revenues Line inspection Scrap Design engineering Cost of returned goods Product-testing equipment Customer support 200 240 145 50 40 50 30 135 90 100 40 40 Rework costs 160 35 Preventive equipment maintenance Product liability claims Incoming materials inspection Breakdown maintenance 200 20 Product-testing labor Training Warranty repair Supplier evaluation 90 220 45 300 75 120 200 50 20 Required: 1. Classify the cost items in the table into prevention, appraisal, internal failure, or external failure categories. 2. Calculate the ratio of each COQ category to revenues in 20X3 and 20X4. Comment on the trends in costs of quality between 20X3 and 20X4. 3. Give two examples of nonfinancial quality measures…
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?
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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
Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each of the following costs, identify the cost graph that best illustrates its cost behavior as the number of units produced increases. a. Direct material cost per unit. b. Fees for using a patent of $500,000 plus $0.25 for each unit produced. c. Salary of quality control supervisor. d. Straight-line depreciation per unit on factory equipment. e. Total direct materials cost.
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Verde Company reported operating costs of 50,000,000 as of December 31, 20x5, with the following environmental costs: Required: 1. Prepare an environmental cost report, classifying costs by quality category and expressing each as a percentage of total operating costs. What is the message of this report? 2. Prepare a pie chart that shows the relative distribution of environmental costs by category. What does this report tell you? 3. What if Verde deliberately did not include the cost of damaging the ecosystem because of solid waste disposal in its environmental cost report? Offer possible reasons for this decision. If consciously avoided, is this decision unethical?
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Accounting Evman Company has decided to introduce a new product, which can be manufactured by either a computer-assisted manufacturing system or a labour-intensive production system. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows: computer-assisted manufacturing system labour-intensive production system Direct Material $5.00 $5.60 Direct Labour .5DLH @ $12 $6.00 .8 DLH @ $9 $7.20 Variable Overhead .5 DLH @ $6 $3.00 .8 DLH @ $6 $4.80 Fixed Overhead * $2,440,000 $1,320,000 These costs are directly traceable to the new product line. They would not be incurred if the new product were not produced. The company’s marketing research department has recommended an introductory sales price of $30. Selling expenses are estimated to be $500,000 annually plus $2 for each unit…
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Schedule of Activity Costs Quality Control Activities Product testing Assessing vendor quality Recalls Rework Scrap disposal Product design Training machine operators Warranty work Process audits From the provided schedule of activity costs, determine the (a) value-added and (b) non-value-added costs. 2 a. Value-added costs $ Activity Cost $55,000 26,000 18,000 29,000 8,000 30,000 46,000 12,000 22,000 b. Non-value-added costs $
How do you conclude calculating measuring quality cost to a percentage for the total cost of quality. Percentage cost $357,000. appraisal cost $445,000 internal failure cost $779,000 external failure cost $1,100,00.