Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 19, Problem 19.18E
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.
- 1. For each period, calculate the ratio of each COQ category to revenues and to total quality costs.
Required
- 2. Based on the results of requirement 1, would you conclude that Osborn’s quality program has been successful? Prepare a short report to present your case.
- 3. Based on the 2015 survey, Amanda Westerly believed that Osborn had to improve product quality. In making her case to Osborn management, how might Westerly have estimated the opportunity cost of not implementing the quality-improvement program?
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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.
In response to intense foreign competition, Florex Company has taken steps to improve the quality of its products. A summary of its
quality costs (in thousands) over the past two years is given below:
Inspection
Quality engineering
Depreciation of test equipment
Rework labor
Statistical process control
Cost of field servicing
Prevention costs:
Total prevention costs
Appraisal costs
Total appraisal costs
Internal failure costs:
Total internal failure costs
External failure costs:
Costs (in thousands)
Last Year This Year
$ 630
$ 918
$ 540
$ 720
$ 180
Supplies used in testing
Systems development
Warranty repairs
Net cost of scrap
Product testing
Product recalls
$ 720
$ 990
$ 2,610
Disposal of production defects
$ 900
Sales have been flat over the past few years, at $90,000,000 per year.
Required:
1. Prepare a quality cost report for this year and last year.
Note: Enter amount values in thousands. Round your percentage answers to 2 decimal places (i.e 0.1234 should be entered as
12.34).…
The production department is proposing the purchase of an automatic insertion machine. It has identified three machines and has asked the accountant to analyze them to determine
which one has the best average rate of return.
Machine A Machine B Machine C
$83,087.40 $73,001.40
322,364.00 276,958.00 486,676.00
Estimated average income $45,130.96
Average investment
Oa. Machine B
Ob. Machine C
Oc. Machine A
Od. Machines B and C have the same preferred average rate of return.
Chapter 19 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 19 - Describe two benefits of improving quality.Ch. 19 - Prob. 19.2QCh. 19 - Name two items classified as prevention costs.Ch. 19 - Give two examples of appraisal costs.Ch. 19 - Distinguish between internal failure costs and...Ch. 19 - Describe three methods that companies use to...Ch. 19 - Companies should focus on financial measures of...Ch. 19 - Give two examples of nonfinancial measures of...Ch. 19 - Give two examples of nonfinancial measures of...Ch. 19 - When evaluating alternative ways to improve...
Ch. 19 - Distinguish between customer-response time and...Ch. 19 - Prob. 19.12QCh. 19 - Give two reasons why delays occur.Ch. 19 - Companies should always make and sell all products...Ch. 19 - Prob. 19.15QCh. 19 - Rector Corporation is examining its quality...Ch. 19 - Six Sigma is a continuous quality improvement...Ch. 19 - Costs of quality. (CMA, adapted) Osborn, Inc.,...Ch. 19 - Costs of quality analysis. Adirondack Company...Ch. 19 - Costs-of-quality analysis. Safe Travel produces...Ch. 19 - Costs of quality, quality improvement. iCover...Ch. 19 - Prob. 19.22ECh. 19 - Prob. 19.23ECh. 19 - Waiting time. Its a Dogs World (IDW) makes toys...Ch. 19 - Waiting time, service industry. The registration...Ch. 19 - Waiting time, cost considerations, customer...Ch. 19 - Nonfinancial measures of quality and time. For the...Ch. 19 - Nonfinancial measures of quality, manufacturing...Ch. 19 - Statistical quality control. Harvest Cereals...Ch. 19 - Quality improvement, Pareto diagram,...Ch. 19 - Quality improvement, relevant costs, and relevant...Ch. 19 - Quality improvement, relevant costs, and relevant...Ch. 19 - Waiting times, manufacturing cycle times. The...Ch. 19 - Prob. 19.34PCh. 19 - Manufacturing cycle times, relevant revenues, and...Ch. 19 - Compensation linked with profitability, waiting...Ch. 19 - Ethics and quality. Weston Corporation...Ch. 19 - Prob. 19.38P
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