Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 8, Problem 28E
The following costs were incurred by Osaka Metals Company to maintain the quality of its products. (The yen is the national currency of Japan.)
- 1. Operating an X-ray machine to detect faulty welds, 110,000 yen
- 2. Repairs of products sold last year, 116,000 yen
- 3. Cost of rewelding faulty joints, 17,000 yen
- 4. Cost of sending machine operators to a three-week training program so they could learn to use new production equipment with a lower defect rate, 18,100 yen
Required: Classify each of these costs as a prevention, appraisal, internal failure, or external failure cost.
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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:
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).…
Inspection time for a plant is 10,000 hours per year. The cost of inspection
consists of salaries of four inspectors, totaling P60,000. Inspection also used
supplies costing P3 per inspection hour. The company has a close to zero defect
state and has eliminated the need for any inspection activity. Calculate the
nonvalue-added cost of inspection per year.
Your answer
A. Jennifer incurs the following quality costs:
$17,000 on systems development
$8,000 on the depreciation of test equipment
$102,000 on warranty repairs
$27,000 on the net cost of scrap
$16,000 on the net cost of spoilage
$77,000 on audits of the effectiveness of the
quality system.
What are the total internal failure costs?
B. Tyler's Inc. makes soap. Tyler plans to
produce 5000 soaps next month. 5000 soaps
require 3000 tons of detergent at the cost of
$11 a ton. Tyler also estimates the need for 1O
workers to work 8 hours a day to meet the
next month's production target. The current
labor rate is $16.50/hr. Tyler estimates fixed
manufacturing overhead cost to be $42,000
for the year and variable manufacturing
overhead to be $15 per labor hour. The
company plans to sell the soaps for $27 each.
What is the total prime cost incurred by Tyler
for the next month? (Assume the month has
30 days)
Chapter 8 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 8 - Briefly explain the difference between absorption...Ch. 8 - Timing is the key in distinguishing between...Ch. 8 - The term direct costing is a misnomer. Variable...Ch. 8 - When inventory increases, will absorption-costing...Ch. 8 - Why do many managers prefer variable costing over...Ch. 8 - Explain why some management accountants believe...Ch. 8 - Prob. 7RQCh. 8 - Why do proponents of absorption costing argue that...Ch. 8 - Why do proponents of variable costing prefer...Ch. 8 - Which is more consistent with cost-volume-profit...
Ch. 8 - Explain how the accounting definition of an asset...Ch. 8 - List and define four types of product quality...Ch. 8 - Explain the difference between observable and...Ch. 8 - Prob. 14RQCh. 8 - What is meant by a products grade, as a...Ch. 8 - Prob. 16RQCh. 8 - Prob. 17RQCh. 8 - Explain three strategies of environmental cost...Ch. 8 - Prob. 19RQCh. 8 - Manta Ray Company manufactures diving masks with a...Ch. 8 - Information taken from Tuscarora Paper Companys...Ch. 8 - Easton Pump Companys planned production for the...Ch. 8 - Pandora Pillow Companys planned production for the...Ch. 8 - Bianca Bicycle Company manufactures mountain bikes...Ch. 8 - Refer to the data given in the preceding exercise...Ch. 8 - Prob. 26ECh. 8 - Prob. 27ECh. 8 - The following costs were incurred by Osaka Metals...Ch. 8 - San Mateo Circuitry manufactures electrical...Ch. 8 - Prob. 31ECh. 8 - Skinny Dippers, Inc. produces nonfat frozen...Ch. 8 - Yellowstone Company began operations on January 1...Ch. 8 - Outback Corporation manufactures tactical LED...Ch. 8 - Great Outdoze Company manufactures sleeping bags,...Ch. 8 - Dayton Lighting Company had operating income for...Ch. 8 - Prob. 37PCh. 8 - Chataqua Can Company manufactures metal cans used...Ch. 8 - Advanced Technologies (AT) produces two...Ch. 8 - Laser News Technology, Inc. manufactures...Ch. 8 - Prob. 42CCh. 8 - Refer to the information given in the preceding...Ch. 8 - Prob. 44C
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