Schedule of Activity Costs Quality Control Activities Process audits Training of machine operators Processing returned products Scrap processing (disposal) Rework Activity Cost $51,900 29,900 19,900 25,700 8,600 31,600 41,000 6,600 22,500 From the provided schedule of activity costs, determine the internal failure costs. Oa. $101,800 Ob. $27,440 Oc. $34,300 Od. $60,800 Preventative maintenance Product design Warranty work Finished goods inspection

Schedule of Activity Costs Quality Control Activities Process audits Training of machine operators Processing returned products Scrap processing (disposal) Rework Activity Cost $51,900 29,900 19,900 25,700 8,600 31,600 41,000 6,600 22,500 From the provided schedule of activity costs, determine the internal failure costs. Oa. $101,800 Ob. $27,440 Oc. $34,300 Od. $60,800 Preventative maintenance Product design Warranty work Finished goods inspection

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter13: Lean Manufacturing And Activity Analysis

Section: Chapter Questions

Problem 2CMA

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Which of the following cost items should be classified as an external failure cost on a cost of quality repo A. Customer returns of defective products OB. Net cost of scrap OC. Supplies used in the quality inspection program OD. Technical support provided to suppliers
On a Cost of Quality report, which of the following cost items should be classified as an internal failure cost? Question 18 options: Net cost of scrap Customer returns of defective products Training for quality control employees Patent cost for a new product
Requirement 1. Classify each cost as value-added, non-value-added, or in the gray area between. a. Materials and labor for servicing machine tools b. Rework costs c. Expediting costs caused by work delays d. Materials-handling costs e. Materials-procurement and inspection costs f. Preventive maintenance of equipment g. Breakdown maintenance of equipment Requirement 2. For any cost classified in the gray area, assume 96% is value-added and 4% is non-value-added. How much of the total of all seven costs is value-added and how much is non-value-added? Compute the total cost for the value-added and nonvalue-added costs, then compute what percentage of the total is value-added and how much is non-value-added. Total percent Total cost of total costs Value-added % Non-value-added % Total costs Requirement 3.…
A number of activities that are part of a company's quality control system are listed below: Required: 1. Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Prevention Appraisal Cost Internal Failure External Failure Cost Activities Cost Cost a. Product testing b Product recalls C. Rework labor and overhead d. Quality circles e Downtime caused by defects f. Cost of field servicing g. Inspection of goods Quality engineering h. i. Warranty repairs j Statistical process control k. Net cost of scrap Depreciation of test equipment m. Returns and allowances arising from poor quality n. Disposal of production defects O. Technical support to suppliers р. Systems development q. Warranty replacements r. Field testing at customer site Quality training S.
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USE FIFO a. total cost of units transferred - out b. the amount of Work in Process,end c. Cost of abnormal loss units
As goods are transferred from a prior process to a subsequent process, the following entry to record the cost of abnormal spoilage would be made: a. debit Work in Process (subsequent department) and credit Work in Process (prior department) b. debit Abnormal Spoilage Loss and credit Work in Process (prior department) c. debit Finished Goods and credit Work in Process (prior department) d. debit Finished Goods and credit Abnormal Loss
The actions listed next are associated with either an activity-based operational control system or a traditional operational control system: a. Budgeted costs for the maintenance department are compared with the actual costs of the maintenance department. b. The maintenance department manager receives a bonus for beating budget. c. The costs of resources are traced to activities and then to products. d. The purchasing department is set up as a responsibility center. e. Activities are identified and listed. f. Activities are categorized as adding or not adding value to the organization. g. A standard for a products material usage cost is set and compared against the products actual materials usage cost. h. The cost of performing an activity is tracked over time. i. The distance between moves is identified as the cause of materials handling cost. j. A purchasing agent is rewarded for buying parts below the standard price set by the company. k. The cost of the materials handling activity is reduced dramatically by redesigning the plant layout. l. An investigation is undertaken to find out why the actual labor cost for the production of 1,000 units is greater than the labor standard allowed. m. The percentage of defective units is calculated and tracked over time. n. Engineering has been given the charge to find a way to reduce setup time by 75 percent. o. The manager of the receiving department lays off two receiving clerks so that the fourth-quarter budget can be met. Required: Classify the preceding actions as belonging to either an activity-based operational control system or a traditional control system. Explain why you classified each action as you did.
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Support activity cost allocation Jakes Gems mines and produces diamonds, rubies, and other gems. The gems are produced by way of the Mining and Cutting activities. These production activities are supported by the Maintenance and Security activities. Security costs are allocated to the production activities based on asset value. Maintenance costs are normally allocated based on machine hours. However, Maintenance costs typically correlate more with the number of service calls. Information regarding the activities is provided in the following table: Instructions 1. Should Maintenance costs continue to be allocated based on machine hours? Why would a different driver be more appropriate? 2. Based on your response to part (1), determine the total costs allocated from each support activity to the other activities using the reciprocal services method and the most appropriate cost driver for Maintenance. 3. Jakes Gems is considering cutting costs by switching to a simpler support activity cost allocation method. Using the information provided and given your response to part (2), determine if switching to the direct method would significantly alter the production activity costs.
Classify each of the following as either one-time or recurring costs: a. training personnel b. initial programming and testing c. systems design d. hardware costs e. software maintenance costsf. site preparation g. rent for facilities h. data conversion from old system to new system i. insurance costs j. installation of original equipment k. hardware upgrades