Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Chapter 13, Problem 4BE
To determine
Calculate the cost of quality report.
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Walton Company has measured its quality costs for the past two years. After the company gathers its quality cost data, it summarizes
those costs using the four categories shown below:
Prevention costs
Appraisal costs
Internal failure costs
External failure costs
Last Year
$ 353,400
$ 445,000
$ 766,300
$ 1,034,000
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?
Required 1 Required 2
This Year
$ 611,000
$ 528,700
$ 550,000
$ 714,000
Complete this question by entering your answers in the tabs below.
Favorable
OUnfavorable
Required 3 Required 4A Required 4B
Is performance trending in a favorable or…
Walton Company has measured its quality costs for the past two years. After the company gathers its quality cost data, it summarizes
those costs using the four categories shown below:
Prevention costs
Appraisal costs
Internal failure costs
External failure costs
Last Year
$ 353,400
$ 445,000
$ 766,300
$ 1,034,000
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?
Required 1 Required 2
Complete this question by entering your answers in the tabs below.
Total cost of quality
This Year
$ 611,000
$ 528,700
$ 550,000
$ 714,000
Required 3 Required 4A Required 4B
Calculate the total cost of quality last year…
Quality Cost Report
Evans Company had total sales of $1,500,000 for fiscal 20x5. The costs of quality-related activities are given below.
Returns/allowances
$90,000
Design changes
82,500
Prototype inspection
4,500
Downtime
112,500
Quality circles
4,500
Packaging inspection
3,000
Field testing
4,500
Complaint adjustment
105,000
Required:
Question Content Area
1. Prepare a quality cost report, classifying costs by category and expressing each category as a percentage of sales. Round percentages to one decimal place, when rounding is required. For example, 5.78% would be entered as "5.8".
Evans CompanyQuality Cost ReportFor the Year Ended 20x5
Quality Costs
Total
Percentage of Sales
Prevention costs:
$- Select -
- Select -
$- Select -
- Select -%
Appraisal costs:
$- Select -
- Select -
- Select -
- Select -
Internal failure costs:
$- Select -
- Select -
- Select -
- Select -
External…
Chapter 13 Solutions
Managerial Accounting
Ch. 13 - What is the benefit of the lean philosophy?Ch. 13 - Prob. 2DQCh. 13 - Prob. 3DQCh. 13 - Prob. 4DQCh. 13 - Prob. 5DQCh. 13 - Why would a lean manufacturer strive to produce...Ch. 13 - Prob. 7DQCh. 13 - Prob. 8DQCh. 13 - Prob. 9DQCh. 13 - Prob. 10DQ
Ch. 13 - Prob. 11DQCh. 13 - Prob. 12DQCh. 13 - Prob. 13DQCh. 13 - Prob. 1BECh. 13 - Prob. 2BECh. 13 - Prob. 3BECh. 13 - Prob. 4BECh. 13 - Prob. 5BECh. 13 - Prob. 1ECh. 13 - Prob. 2ECh. 13 - Lean principles Rag Swag Inc. manufactures various...Ch. 13 - Prob. 4ECh. 13 - Reduce setup time Vernon Inc. has analyzed the...Ch. 13 - Compute lead time Jackson Fabricators Inc....Ch. 13 - Calculate lead time Williams Optical Inc. is...Ch. 13 - Prob. 8ECh. 13 - Prob. 9ECh. 13 - Prob. 10ECh. 13 - Prob. 11ECh. 13 - Prob. 12ECh. 13 - Lean accounting Modern Lighting Inc. manufactures...Ch. 13 - Prob. 14ECh. 13 - Prob. 15ECh. 13 - Prob. 16ECh. 13 - Prob. 17ECh. 13 - Prob. 18ECh. 13 - Process activity analysis The Brite Beverage...Ch. 13 - Prob. 20ECh. 13 - Prob. 21ECh. 13 - Lean principles Bright Night, Inc., manufactures...Ch. 13 - Prob. 2PACh. 13 - Lean accounting Dashboard Inc. manufactures and...Ch. 13 - Pareto chart and cost of quality report for a...Ch. 13 - Prob. 1PBCh. 13 - Lead time Master Chef Appliance Company...Ch. 13 - Lean accounting Com-Tel Inc. manufactures and...Ch. 13 - Pareto chart and cost of quality report for a...Ch. 13 - Prob. 1MADCh. 13 - Prob. 2MADCh. 13 - Prob. 3MADCh. 13 - Prob. 4MADCh. 13 - Ethics in Action In August, Lannister Company...Ch. 13 - Prob. 3TIFCh. 13 - Prob. 1CMACh. 13 - Prob. 2CMACh. 13 - In measuring the cost of quality, which one of the...Ch. 13 - Prob. 4CMA
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- Cost of quality report A. Using the information in Exercise 15, identify the cost of quality classification for each activity. B. Prepare a cost of quality report. Assume sales for the period were 4,000,000. Round percentages to one decimal place. C. Interpret the cost of quality report.arrow_forwardQuality 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.arrow_forwardKang Company reported sales of 3,240,000 in 20x5. At the end of the calendar year, the following quality costs were reported: Required: 1. Prepare a quality cost report. 2. Prepare a graph (pie chart or bar graph) that shows the relative distribution of quality costs, and comment on the distribution.arrow_forward
- 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.arrow_forwardEvans Company had total sales of 3,000,000 for fiscal 20x5. 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. 3. What if, five years from now, quality costs are 7.5 percent of sales, with control costs being 65 percent of the total quality costs? What would your conclusion be?arrow_forwardCost of quality and value-added/non-value-added reports for a service company A. Using the information in Exercise 17, identify the cost of quality classification for each activity and whether the activity is value-added or non-value-added. B. Prepare a cost of quality report. Assume that sales are 3,000,000. (Round percentages to one decimal place.) C. Prepare a value-added/non-value-added analysis. D. Interpret the information in (B) and (C).arrow_forward
- Bradshaw Company reported sales of 5,000,000 in 20X1. At the end of the fiscal year (June 30, 20X1), the following quality costs were reported: Required: 1. Prepare a quality cost report. 2. Prepare a graph (pie chart or bar graph) that shows the relative distribution of quality costs, and comment on the distribution. 3. Assuming sales of 5,000,000, by how much would profits increase if quality improves so that quality costs are only 3% of sales?arrow_forwardNabors Company had actual quality costs for the year ended June 30, 20x5, as given below. At the zero-defect state, Nabors expects to spend 375,000 on quality engineering, 75,000 on vendor certification, and 50,000 on packaging inspection. Assume sales to be 25,000,000. Required: 1. Prepare a long-range performance report for 20x5. What does this report tell the management of Nabors? 2. Explain why quality costs still are present for the zero-defect state. 3. What if Nabors achieves the zero-defect state reflected in the report? What are some of the implications of this achievement?arrow_forwardWalton Company has measured its quality costs for the past two years. After the company gathers its quality cost data, it summarizes those costs using the four categories shown below: This Year $ 357,000 $ 650,000 $ 445,000 $ 545,000 $ 790,000 $ 500,000 $1,100,000 $ 680,000 Last Year Prevention costs Appraisal costs Internal failure costs External failure costs Required: 1. Calculate the total cost of quality last year and this year. Last Year This Year Total cost of quality $ 2,692,000 $ 2,375,000 2. For last year, calculate the cost in each of the four categories as a percent of the total cost of quality. (Round your answers to 1 decimal place.) Last Year Prevention costs 13.3 % Appraisal costs 16.5 % Internal failure costs % 40.9 % 70.7 % External failure costs Total percentarrow_forward
- Walton Company has measured its quality costs for the past two years. After the company gathers its quality cost data, it summarizes those costs using the four categories shown below: Last Year This Year Prevention costs $ 357,000 $ 650,000 Appraisal costs $ 445,000 $ 545,000 Internal failure costs $ 790,000 $ 500,000 External failure costs $ 1,100,000 $ 680,000 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. (Round your answers to 1 decimal place.) 3. For this year, calculate the cost in each of the four categories as a percent of the total cost of quality. (Round your answers to 1 decimal place.) 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?multiple choice Favorable Unfavorablearrow_forwardCompany A measured its total quality cost for 2 years. After the company gathers uts quality cost data, it summarizes per cost using the four categories shown prevention cost 357,000 apprasial costs 445,000 internal failure costs 790,000 external failure costs 1,100,000 total cost 2,692,000 what is the percentage of each categoryarrow_forwardThe manager of Trusty Car Inspection reviewed the monthly operating costs for the past year. The costs ranged from $4,300 for 1,300 inspections to $3,900 for 900 inspections. Requirements 1. Use the high-low method to calculate the variable cost per inspection. 2. Calculate the total fixed costs. 3. Write the equation and calculate the operating costs for 1,000 inspections. 4. Draw a graph illustrating the total cost under this plan. Label the axes, and show the costs at 900, 1,000, and 1,300 inspections.arrow_forward
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