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 19.28E
Nonfinancial measures of quality, manufacturing cycle efficiency. (CMA, adapted) Turnkey Manufacturing evaluates the performance of its production managers based on a variety of factors, including cost, quality, and cycle time. The following are nonfinancial measures for quality and time for 2016 and 2017 for its only product:
| Nonfinancial Quality Measures | 2016 | 2017 |
| Number of returned goods | 500 | 1,000 |
| Number of defective units reworked | 2,500 | 2,000 |
| Annual hours spent on quality training per employee | 36 | 54 |
| Number of units delivered on time | 20,000 | 34,000 |
| Annual Totals | 2016 | 2017 |
| Units of finished goods shipped | 25,000 | 1,800 |
| Average total hours worked per employee | 40,000 | 1,800 |
The following information relates to the average amount of time needed to complete an order:
| Time to Complete an Order | 2016 | 2017 |
| Wait time | ||
| From customer placing order to order being received by production | 14 | 10 |
| From order received by production to machine being set up for production | 9 | 7 |
| Inspection time | 5 | 3 |
| Process time | 4 | 4 |
| Move time | 2 | 2 |
- 1. Compute the manufacturing cycle efficiency for an order for 2016 and 2017.
Required
- 2. For each year 2016 and 2017, calculate the following:
- a. Percentage of goods returned
- b. Defective units reworked as a percentage of units shipped
- c. Percentage of on-time deliveries
- d. Percentage of hours spent by each employee on quality training
- 3. Evaluate management’s performance on quality and timeliness in 2016 and 2017.
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Brant Freezer Warehouse Performance
2016 Figures
Units Shipped
12 Months 5 Months
Jan.-Dec. through
May 31
Units Shipped
Projected Actual
12 Months 5 Months
Jan.-Dec. May 31
Atlanta
17,431
4,080
35,890
18,000
Boston
6,920
3,061
27,915
7,200
Chicago 28,104
14,621 246,315
131,618 30,000
Denver
3,021
1,005a
28,019
8,600*
3,100
Fargo
2,016
980
16,411
8,883
2,000
Los Angeles 16,491 11,431
151,975 109,690
17,000
Portland
8,333
4,028
73,015
36,021
9,000
St. Louis
5,921
2,331
51,819
23,232
8,000
Warehouse Costs
12 Months 5 Months
Jan.-Dec. through
May 31
156,830
63,417
2017 Figures
a Denver warehouse closed by strike March 4-19, 2016.
Warehouse Costs
Budgeted Actual Costs
12 Months
Jan.-Dec.
4,035
178,000
3,119
73,000
15,230 285,000
1,421
31,000
804
17,000
9,444
176,000
4,600
85,000
2,116
56,000
through
May 31
40,228
29,416
141,222
14,900
9,605
93,280
42,616
19,191
As a direct result of your committee's work, quality significantly improved during the latest year while costs and rework decreased. Titan Computer Company also reduced manufacturing capacity because of lowered rework support needs. Sales of AllPad have increased in tandem with a decrease in unit price (following the intent to increase market share). Information about the current period (2016) and prior period (2015) follows.
Type of Data
2015
2016
Units of AIIPad produced and sold
800
900
Selling price
$450
$430
Pounds of direct material used
3,200
3,300
Direct material cost per pound
$35
$35
Manufacturing capacity in units
12,000
11,000
Total conversion costs
$1,800,000
$1,650,000
Conversion cost per unit of capacity
$150
$150
Selling and customer service capacity
customers
90 customers
Total selling and customer service costs
$495,000
$495,000
Selling and customer service capacity cost and customer…
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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