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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Chapter 19, Problem 19.23E
1.
To determine
Contribution margin:
The amount of the contribution margin is the difference between the selling price of per unit and variable cost of per unit. Here contribution is the part of the sales revenue.
To determine: Implementation of J’s idea upon car wash technique.
2.
To determine
Non-financial factors that are to be considered before implementing the new design.
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TidyCar washes vehicles using a nohands approach. Business is good but Jonathan, the manager, has noticed that customers complain because there are streaks on their vehicles at pickup. TidyCar warrants that each vehicle will sparkle at delivery and charges $25 for each vehicle. TidyCar washes 100 vehicles each day and last month, 40% of them required a hand finish. Each hand wash costs $15. Jonathan believes the problem can be eliminated by a prewash (costing $2 per vehicle) and an equipment calibration at the start of each day, which will reduce the number of vehicles washed each day by 10, but will decrease the vehicles requiring a hand finish from 40% to 10%.
Q. What nonfinancial and qualitative factors should TidyCar consider in deciding whether to implement the new design?
Supreme Furniture needs to purchase glass panes to make glass top coffee tables. Last year Supreme
Furniture has two suppliers, Bobux and Twinkle, with the following supplier related information:
Cost per unit of Number of activities Number of activities
activity driver for Bobux
Supplier related activities
Returning poor quality glass panes $120 per pane 25 panes
Processing purchase orders
Receiving and inspecting deliveries S50 per delivery 15 deliveries
Supplier audit
Rework due to poor quality glass $100 per table 60 tables
Purchase price per glass pane
for Twinkle
12 panes
40 orders
15 deliveries
2 audits
15 tables
$150
780
$20 per order 12 orders
$1000 per audit 5 audits
$100
Number of glass panes purchased
446
Calculate the supplier performance index of Bobux (round your answer to 2 decimal places).
Answer.
Coronado Makeup produces face cream. Each bottle of face cream costs $12 to produce and
can be sold for $13. The bottles can be sold as is, or processed further into sunscreen at a cost
of $14 each. Coronado Makeup could sell the sunscreen bottles for $23 each. What should
Coronado Makeup do?
Face cream must be further processed because it increases operating income by $1
each.
O Face cream must not be further processed because incremental revenue is less than
incremental processing costs.
O Face cream must be further processed because its operating income is $9 each.
Face cream must not be further processed because it decreases operating income
by $3 each.
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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