Strength-testing one item from each batch of panels $ 68,000 Training employees in TQM 27,000 Training suppliers in TQM 39,000 Identifying suppliers who commit to on-time delivery of perfect-quality materials 58,000 Clason expects the new program would save costs through the following: Avoid lost profits rom lost sales due to disappointed customers $ 86,000 Avoid rework and spoilage 63,000 Avoid inspection of raw materials 57,000 Avoid warranty costs 15,000

Strength-testing one item from each batch of panels $ 68,000 Training employees in TQM 27,000 Training suppliers in TQM 39,000 Identifying suppliers who commit to on-time delivery of perfect-quality materials 58,000 Clason expects the new program would save costs through the following: Avoid lost profits rom lost sales due to disappointed customers $ 86,000 Avoid rework and spoilage 63,000 Avoid inspection of raw materials 57,000 Avoid warranty costs 15,000

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter2: Accounting For Materials

Section: Chapter Questions

Problem 1MC: Financial and Nonfinancial Aspects of Changing to JIT IntelliTalk manufactures smart phones. It is...

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Financial and Nonfinancial Aspects of Changing to JIT IntelliTalk manufactures smart phones. It is considering the implementation of a JIT system. Costs to reconfigure the production line will amount to 200,000 annually. Estimated benefits from the change to JIT are as follows: The quality advantages of JIT should reduce current rework cost of 300,000 by 25%. Materials storage, handling, and insurance costs of 250,000 would be reduced by an estimated 40%. Average inventory is expected to decline by 300,000 units, and the carrying cost per unit is .35. Required: 1. What is the estimated financial advantage or disadvantage of changing to a JIT system? 2. Are there any nonfinancial advantages or disadvantages of changing to a JIT system?
Production run size and activity improvement Littlejohn, Inc., manufactures machined parts for the automotive industry. The activity cost associated with Part XX-10 is as follows: Each unit requires 30 minutes of fabrication direct labor. Moreover, Part XX-10 is manufactured in production run sizes of 50 units. Each production run is set up, scheduled (production control), and moved as a batch of 50 units. Management is considering improvements in the setup, production control, and moving activities in order to cut the production run sizes by half. As a result, the number of setups, production runs, and moves will double from 10 to 20. Such improvements are expected to speed the companys ability to respond to customer orders. Setup is reengineered so that it takes 60% of the original cost per setup. Production control software will allow production control effort and cost per production run to decline by 60%. Moving distance was reduced by 40%, thus reducing the cost per move by the same amount. A. Determine the revised activity cost per unit under the proposed changes. B. Did these improvements reduce the activity cost per unit? C. What cost per unit for setup would be required for the solution in (a) to equal the base solution?
Schedule of Activity Costs Quality Control Activities Product testing Assessing vendor quality Recalls Rework Scrap disposal Product design Training machine operators Warranty work Process audits Activity Cost $55,000 26,000 18,000 29,000 8,000 30,000 46,000 12,000 22,000 From the provided schedule of activity costs, determine the internal failure costs.
ymy wy days in the foowing four activity costs of a notes: Inspecting cleanliness of rooms Processing lost customer reservations Reworking incorrectly prepared room service meals Employee training Total Sales are $2,500,000. Prepare a cost of quality report. Round percent of sales to one decimal place. Quality Cost Classification Prevention Appraisal Internal failure External failure Totals Cost of Quality Report $180,000 60,000 30,000 230,000 $500,000 Quality Cost Percent of Total Percent of Quality Cost Total Sales
Pareto Chart and Cost of Quality Report for a Manufacturing Company The president of Mission Inc. has been concerned about the growth in costs over the last several years. The president asked the controller to perform an activity analysis to gain a better insight into these costs. The result of the activity analysis is summarized as follows: Activities Activity Cost Correcting invoice errors $11,250 Disposing of incoming materials with poor quality 9,000 Disposing of scrap 31,500 Expediting late production 27,000 Final inspection 22,500 Inspecting incoming materials 4,500 Inspecting work in process 22,500 Preventive machine maintenance 15,750 Producing product 67,500 Responding to customer quality complaints 13,500 Total $225,000 The production process is complicated by quality problems, requiring the production manager to expedite production and dispose of scrap. Required: 1. On paper or in a spreadsheet program, prepare a Pareto chart for each of the…
Analyze CSR initiatives at Green Manufacturing Green Manufacturing is a traditional manufacturing company located in the midwestern United States. The company’s operations manager is developing a strategy to become more CSR-oriented. In an effort to evaluate possible areas where CSR initiatives can be implemented, the manager has gathered the following data regarding three potential CSR activities: Initial added cost Variable cost Variable savings Recycle and reuse production material $5,000 $0.10 per lb. of recycled material $0.15 per lb. of recycled material Add solar panels as a source of power 700,000 $1,000 per year $33,000 per year Replace assembly room light fixtures with natural light 120,000 $180 per month $220 per month The recycling activity would carry on indefinitely. The solar panels would have a useful life of 30 years. The replacement of assembly room light fixtures with natural light is assumed to have an 80-year…
XYZ Company made expenditures for the following: Costs in activities aimed at obtaining new knowledge P 10,000 Cost of developing and producing a prototype model 3,000 Cost of testing the prototype model for safety and environmental friendliness 30,000 Cost of revising designs for flaws in the prototype model 10,000 Salaries of employees, consultants and technicians involved in R and D 20,000 Marketing research to study consumer tastes 5,000 Advertising to establish recognition of the newly developed product 30,000 Cost of conference for the introduction of the newly developed product including fee of a model hired as endorser How much is recognized as research and development expense? _____________
Question Content Area A local picnic table manufacturer has budgeted these overhead costs: Purchasing $70,000 Handling Materials 34,580 Machine Setups 72,000 Inspections 30,600 Utilities 27,000 They are considering adapting ABC costing and have estimated the cost drivers for each pool as shown: Cost Driver Activity Orders 700 Material Moves 1,330 Machine Setups 16,000 Number of Inspections 6,000 Square Feet 180,000 Recent success has yielded an order for 1,000 tables. Assume direct labor costs per hour of $20. Activity Order, Units 1,000 Direct Materials 112,600 Machine Hours 15,300 Direct Labor Hours 5,200 Number of Purchase Orders 70 Number of Material Moves 750 Number of Machine Setups 100 Number of Inspections 450 Number of Square Feet Occupied 8,000 Determine how much the job would cost given the following activities: Do not round intermediate computations and round final answers to nearest whole number. Cost Assigned…
The management of Boogie Company thinks that its total costs of quality can be reduced by increasing expenditures in certain key costs of quality categories. The following costs of quality have been identified by management: Cost of Quality Rework Recalls Reengineering efforts Repair Replacements Retesting Supervision Scrap Training Testing of incoming materials Inspection of work in process Downtime Product liability insurance Quality audits Continuous improvement Warranty repairs Costs P 6.000.00 15,000.00 9.000.00 12.000.00 12.000.00 5.000.00 18,000.00 9,000.00 15.000.00 7.000.00 18,000.00 10,000.00 9,000.00 5.000.00 1000.00 15,000.00 Required: 1. Classify these costs into the four costs of quality categories 2. Determine the total pesos being spent on each of the categories 3. Based on the company's expenditures by cost of quality categories, on which cost category should the company concentrate its efforts to decrease its overall costs of quality?
Required information Problem 9-62 and 9-63 (Algo) Cain Components manufactures and distributes various plumbing products used in homes and other buildings. Over time, the production staff has noticed that products they considered easy to make were difficult to sell at margins considered reasonable, while products that seemed to take a lot of staff time were selling well despite recent price increases. A summer intern has suggested that the cost system might be providing misleading information. The controller decided that a good summer project for the intern would be to develop, in one self-contained area of the plant, an alternative cost system with which to compare the current system. The intern identified the following cost pools and, after discussion with some plant personnel, appropriate cost drivers for each pool. There were: Cost Pools Costs Activity Drivers Receiving $ 600,000 Direct material cost Manufacturing 5,500,000 Machine-hours Machine setup 900,000…
Schedule of Activity Costs Quality Control Activities Product testing Assessing vendor quality Recalls Rework Scrap disposal Product design Training machine operators Warranty work Process audits From the provided schedule of activity costs, determine the (a) value-added and (b) non-value-added costs. 2 a. Value-added costs $ Activity Cost $55,000 26,000 18,000 29,000 8,000 30,000 46,000 12,000 22,000 b. Non-value-added costs $
I. Activity Costs Caused by Suppliers (testing failures and reordering as a result) Activity Costs Testing components $1,200,000 Reordering components 300,000 II. Supplier Data Alpha Electronics La Paz Company 125X 30Y 125X 30Y Unit purchase price $10 $26 $12 $28 Units purchased 120,000 81,700 15,000 15,000 Failed tests 1,300 780 10 10 Number of reorders 60 40 0 0 Required: Determine the cost of each supplier by using ABC. Round Test and Reorder rates to the nearest dollar, and final answers to the nearest cent. Alpha Electronics La Paz Company 125X 30Y 125X 30Y Unit cost: $fill in the blank $fill in the blank $fill in the blank $fill in the blank