cost ch14

cost ch14 - 14–4 1 Internal failure 2 Prevention 3...

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Unformatted text preview: 14–4 1. Internal failure 2. Prevention 3. Internal failure 4. External failure 5. External failure 6. External failure 7. Prevention 8. Internal failure 9. Appraisal 10. Internal failure 11. External failure 12. Appraisal 13. Prevention 14. Prevention 15. External failure 16. Prevention 17. External failure 18. Prevention 19. Prevention 20. Appraisal 21. External failure 22. Prevention 23. Appraisal 14–5 1. Activity rates: Warranty: \$204,000/2,550 = \$80 per unit Scrap: \$153,000/4,250 = \$36 per unit Inspection:\$76,500/5,100 = \$15 per hour Training: \$42,500/170 = \$250 per hour Product cost: Carburetor A Carburetor B Warranty: \$80 × 1,700...................... \$ 136,000 \$80 × 850......................... \$ 68,000 Scrap: \$36 × 3,400....................... 122,400 \$36 × 850.......................... 30,600 Inspection: \$15 × 3,400....................... 51,000 \$15 × 1,700....................... 25,500 Training: \$250 × 85.......................... 21,250 \$250 × 85.......................... 21,250 Total assigned......................... \$ 330,650 \$ 145,350 Divided by units..................... ÷ 170,000 ÷ 340,000 Unit cost............................ \$ 1 .95 * \$ .43 * *Rounded. Carburetor A has more than four times the amount of quality costs assigned than Carburetor B. Thus, A appears to be the lower-quality product. 2. The unit quality cost can be used to rank products in order of the lowest quality to that of the highest. This information can then be used to determine where quality improvement efforts should be focused. It may reveal, for example, that products follow the Pareto Principle: 20% of the products are causing 80% of the quality problems. (The Pareto Principle claims that 20% of the people do 80% of the work in any organization.) 14–6 1. Benton Company Quality Cost Report For the Year Ended December 31, 2007 Percentage of Quality Costs...
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This homework help was uploaded on 04/18/2008 for the course ACCT cost taught by Professor Staff during the Spring '08 term at Oklahoma State.

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cost ch14 - 14–4 1 Internal failure 2 Prevention 3...

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