10-30 COSTS OF QUALITY ANALYSIS. Safe Travel produces car seats for children from newborn to 2...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/6659926b7ba4b_2196659926b1c5dc.jpg)
Transcribed Image Text:
10-30 COSTS OF QUALITY ANALYSIS. Safe Travel produces car seats for children from newborn to 2 years old. The company is worried because one of its competitors has recently come under public scrutiny because of product failure. Historically, Safe Travel's only problem with its car seats was stitching in the straps. The problem can usually be detected and repaired during an internal inspection. The cost of the inspection is $5.00 per car seat, and the repair cost is $1.00 per car seat. All 200,000 car seats were inspected last year, and 5% were found to have problems with the stitching in the straps during the internal inspection. Another 1% of the 200,000 car seats had problems with the stitching, but the internal inspection did not discover them. Defective units that were sold and shipped to customers needed to be shipped back to Safe Travel and repaired. Shipping costs are $8.00 per car seat, and repair costs are $1.00 per car seat. However, the out-of-pocket costs (shipping and repair) are not the only costs of defects not discovered in the internal inspection. Negative publicity will result in a loss of future contribution margin of $100 for each external failure. Required 1. Calculate appraisal cost. 2. Calculate internal failure cost. 3. Calculate out-of-pocket external failure cost. 4. Determine the opportunity cost associated with the external failures. 5. What are the total costs of quality? 6. Safe Travel is concerned with the high up-front cost of inspecting all 200,000 units. It is considering an alternative internal inspection plan that will cost only $3.00 per car seat inspected. During the internal inspection, the alternative technique will detect only 3.5% of the 200,000 car seats that have stitching problems. The other 2.5% will be detected after the car seats are sold and shipped. What are the total costs of quality for the alternative technique? 7. What factors other than cost should Safe Travel consider before changing inspection techniques? 10-30 COSTS OF QUALITY ANALYSIS. Safe Travel produces car seats for children from newborn to 2 years old. The company is worried because one of its competitors has recently come under public scrutiny because of product failure. Historically, Safe Travel's only problem with its car seats was stitching in the straps. The problem can usually be detected and repaired during an internal inspection. The cost of the inspection is $5.00 per car seat, and the repair cost is $1.00 per car seat. All 200,000 car seats were inspected last year, and 5% were found to have problems with the stitching in the straps during the internal inspection. Another 1% of the 200,000 car seats had problems with the stitching, but the internal inspection did not discover them. Defective units that were sold and shipped to customers needed to be shipped back to Safe Travel and repaired. Shipping costs are $8.00 per car seat, and repair costs are $1.00 per car seat. However, the out-of-pocket costs (shipping and repair) are not the only costs of defects not discovered in the internal inspection. Negative publicity will result in a loss of future contribution margin of $100 for each external failure. Required 1. Calculate appraisal cost. 2. Calculate internal failure cost. 3. Calculate out-of-pocket external failure cost. 4. Determine the opportunity cost associated with the external failures. 5. What are the total costs of quality? 6. Safe Travel is concerned with the high up-front cost of inspecting all 200,000 units. It is considering an alternative internal inspection plan that will cost only $3.00 per car seat inspected. During the internal inspection, the alternative technique will detect only 3.5% of the 200,000 car seats that have stitching problems. The other 2.5% will be detected after the car seats are sold and shipped. What are the total costs of quality for the alternative technique? 7. What factors other than cost should Safe Travel consider before changing inspection techniques?
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Why is the fact that moneylenders marginal costs are below average costs a hallmark of monopolistic competition?
-
Suppose a company has a monopoly on a game called Monopoly and faces a demand curve given by QT = 100 P and a marginal revenue function given by MR = 100 2QT Where QT equals the combined total...
-
A nonprofit organization's assets that have been designated by its board of directors for a new project, should be reported as net assets __________ donor restrictions. without with with temporary...
-
What are the similarities and differences among Greco-Roman polytheism, medieval monotheism and Renaissance humanism?
-
Prof provided the answer key but REQUIRES showing the solution/analysis using Excel functions/formulas STEP-BY-STEP. Thank you. Answer Key : PJ% = .2974, or 29.74% PK% = .2333, or 23.33% Question :...
-
Alex pushes against a car stuck in a snowbank with a force of 8 5 lbf , while his friend sits nervously behind the steering wheel trying not to make the tires spin. They try this for 1 0 minutes....
-
heat up two slices of pizza in the oven. Each slice has a mass of 1 0 0 g . The pizza ( cheese ) is initially solid at a temperature of 3 9 . 2 F . I place the pizza slices in a 3 5 0 F preheated...
-
Our goal is to observe some of the best programs and to recognize what made these programs superior. Select one campaign that you consider outstanding. State the slogan (or if no slogan state in a...
-
XYZ firm reported net income of $3.44bn and revenues of $19.1bn over the most recent twelve-month period. The current market capitalization for XYZ firm is $3.8bn. What is XYZ firm's P/S ratio
-
This year Amy purchased $2,780 of equipment for use in her business. However, the machine was damaged in a traffic accident while Amy was transporting the equipment to her business. Note that because...
-
Asset W has an expected retum of 25 percent and a beta of 1.6. If the risk-free rate is 7 percent, complete the following table for portfolios of Asset W and a risk-free asset. Illustrate the...
-
Suppose you observe the following situation: Expected Security Beta Return Oxy Co. 1.35 23% More-On Co. .90 17
-
Stock Y has a beta of 1.59 and an expected retum of 25 percent. Stock Z has a beta of .44 and an expected return of 12 percent. If the risk-free rate is 6 percent and the market risk premium is 11.3...
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App