Managerial Accounting
16th Edition
ISBN: 9781259995484
Author: Ray Garrison
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 1.A, Problem 4P
PROBLEM 1A−4 Quality Cost Report LO1−7, LO1−8
page 66
In response to intensive foreign competition, the management of Florex Company has attempted over the past year to improve the quality of its products. A statistical process
| Costs (in thousands) | ||
| Last Year | This Year | |
| Inspection | $750 | $900 |
| Quality engineering | $420 | $570 |
| Depreciation of test equipment | $210 | $240 |
| Rework labor | $1050 | $1500 |
| Statistical process control | $0 | $180 |
| Cost of field servicing | $1200 | $900 |
| Supplies used in testing | $30 | $60 |
| Systems development | $480 | $750 |
| Warranty repairs | $3600 | $1050 |
| Net cost of scrap | $630 | $1125 |
| Product testing | $810 | $1,200 |
| Product recalls | $2,100 | $750 |
| Disposal of defective products | $720 | $975 |
Sales have been flat over the past few years, at $75,000,000 per year. A great deal of money has been spent in the effort to upgrade quality, and management is anxious to see whether or not the effort has been effective.
Required:
- Prepare a quality cost report that contains data for both this year and last year. Carry percentage computations to two decimal places.
- Prepare a bar graph showing the distribution of the various quality costs by category.
- Prepare a written evaluation to accompany the reports you have prepared in (1) and (2) above. This evaluation should discuss the distribution of quality costs in the company, changes in this distribution that you see taking place, the reasons for changes in costs in the various categories, and any other information that would be of value to management.
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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:
Last Year
Inspection
$ 765
$ 1,584
$ 540
$ 675
$630
$ 225
$ 1,260
$ 1,620
$O
$ 225
$ 1,710
$ 1,170
$ 45
$ 81
$ 630
$ 900
$ 4,140
$ 1,260
$ 540
$ 1,530
$ 900
$ 1,440
$ 2,700
$ 990
Disposal of production defects $ 900
$ 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.
Quality engineering
Depreciation of test equipment
Rework labor
Costs (in thousands)
This Year
Statistical process control
Cost of field servicing
Supplies used in testing
Systems development
Warranty repairs
Net cost of scrap
Product testing
Product recalls
In response to intensive foreign competition, the management of Florex Company has attempted over the past year to improve the
quality of its products. A statistical process control system has been installed and other steps have been taken to decrease the amount
of warranty and other field costs, which have been trending upward over the past several years. Costs relating to quality and quality
control over the last two years are given below:
Costs (in thousands)
Last
This
Year
Year
$ 1,584
Inspection
Quality engineering
Depreciation of test eguipment
765
540
675
630
225
$ 1,260
$ 1,620
225
Rework labor
Statistical process control
Cost of field servicing
$ 1,710
1,170
81
Supplies used in testing
Systems development
Warranty repairs
Net cost of scrap
Product testing
Product recalls
45
630
900
1,260
24
4,140
1,530
$ 1,440
990
540
900
$ 2,700
900
Disposal of defective products
900
Sales have been flat over the past few years, at $90,000,000 per year. A great deal of money has been spent in…
In response to intensive foreign competition, the management of Florex Company has attempted over the past year to improve the
quality of its products. A statistical process control system has been installed and other steps have been taken to decrease the amount
of warranty and other field costs, which have been trending upward over the past several years. Costs relating to quality and quality
control over the last two years are given below:
Inspection
Quality engineering
Depreciation of test equipment
Rework labor
Statistical process control
Cost of field servicing
Supplies used in testing
Systems development
Warranty repairs
Costs (in thousands)
Last Year This Year
$ 660
$ 1,215
$ 300
$ 600
$ 300
$ 225
$ 900
$ 0
$ 300
$ 1,200
$ 30
$ 1,500
$ 1,050
$ 60
$ 750
Net cost of scrap
Product testing
ces
Product recalls
Disposal of defective products
$ 900
$ 3,375
$ 450
$ 1,110
$ 2,625
$ 1,350
$ 900
$ 1,350
$ 750
$ 750
$ 750
Sales have been flat over the past few years, at $75,000,000 per…
Chapter 1 Solutions
Managerial Accounting
Ch. 1.A - EXERCISE 1A1 Cost of Quality Terms LO17, LO18 A...Ch. 1.A - EXERCISE 1A2 Classification of Quality Costs LO17...Ch. 1.A - Prob. 3PCh. 1.A - PROBLEM 1A4 Quality Cost Report LO17, LO18 page 66...Ch. 1 - Prob. 1QCh. 1 - Define the following: (a) direct materials, (b)...Ch. 1 - Explain the difference between a product cost and...Ch. 1 - Distinguish between (a) a variable cost, (b) a...Ch. 1 - Prob. 5QCh. 1 - Define the following terms: (a) cost behavior and...
Ch. 1 - What is meant by an activity base when dealing...Ch. 1 - Managers often assume a strictly linear...Ch. 1 - Distinguish between discretionary fixed costs and...Ch. 1 - Does the concept of the relevant range apply to...Ch. 1 - What is the difference between a traditional...Ch. 1 - Prob. 12QCh. 1 - Prob. 13QCh. 1 - Prob. 14QCh. 1 - Prob. 1AECh. 1 - Prob. 2AECh. 1 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 1 - L012, L013, L014, L015, L016 Martinez Company’s...Ch. 1 - L01–1, L01–2, L01–3, L01–4, L01–5, L01–6
Martinez...Ch. 1 - L01–1, L01–2, L01–3, L01–4, L01–5, L01–6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 1 - EXERCISE 1—1 Identifying Direct and Indirect Costs...Ch. 1 - EXERCISE 1-2 Classifying Manufacturing Costs LO1-2...Ch. 1 - EXERCISE 1-3 Classifying Costs as Product or...Ch. 1 - EXERCISE 14 Fixed and Variable Cost Behavior LO14...Ch. 1 - Prob. 5ECh. 1 - EXERCISE 1—6 Traditional and Contribution Format...Ch. 1 - Prob. 7ECh. 1 - EXERCISE 18 Product Costs and Period Costs;...Ch. 1 - Prob. 9ECh. 1 - Prob. 10ECh. 1 - EXERCISE 1—11 Cost Behavior; Contribution Format...Ch. 1 - EXERCISE 1-12 Product and Period Cost Flows LO1–3...Ch. 1 - Prob. 13ECh. 1 - EXERCISE 1-14 Cost Classification 1O1–2, LO1–3,...Ch. 1 - Prob. 15ECh. 1 - EXERCISE 1–16 Cost Classifications for Decision...Ch. 1 - EXERCISE 1-17 Classifying Variable and Fixed Costs...Ch. 1 - PROBLEM 1-18 Direct and Indirect Costs; variable...Ch. 1 - PROBLEM 1-19 Traditional and Contribution Format...Ch. 1 - PROBLEM 120 Variable and Fixed Costs; Subtleties...Ch. 1 - Prob. 21PCh. 1 - Prob. 22PCh. 1 - PROBLEM 123 Cost Classification LO11, LO13, LO14...Ch. 1 - PROBLEM 1-24 Different Cost Classifications for...Ch. 1 - Prob. 25PCh. 1 - CASE 1-26 Cost Classification and Cost Behavior...Ch. 1 - Prob. 27C
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