Answered step by step
Verified Expert Solution
Question
1 Approved Answer
eBook Question Content Area Cost of Quality Report for a Manufacturing Company The president of Mission Inc. has been concerned about the growth in costs
eBook
Question Content Area
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 activity analysis revealed the following:
Activities Activity Cost
Correcting invoice errors $
Disposing of incoming materials with poor quality
Disposing of scrap
Expediting late production
Final inspection
Inspecting incoming materials
Inspecting work in process
Preventive machine maintenance
Producing product
Responding to customer quality complaints
Total $
The production process is complicated by quality problems, requiring the production manager to expedite production and dispose of scrap.
Required:
Classify the activities into prevention, appraisal, internal failure, external failure, and not costs of quality producing product Classify the activities into valueadded and nonvalueadded activities.
Activity Activity
Cost Cost of Quality
Classification ValueAdded
NonValueAdded
Classification
Correcting invoice errors $
Disposing of incoming materials with poor quality
Disposing of scrap
Expediting late production
Final inspection
Inspecting incoming materials
Inspecting work in process
Preventive machine maintenance
Producing product
Responding to customer quality complaints
Total $
Use the activity cost information to determine the percentages of total costs that are prevention, appraisal, internal failure, external failure, and not costs of quality producing product
Quality Cost
Classification Activity Cost Percent of Total
Department Cost
Prevention $fill in the blank
fill in the blank
Appraisal fill in the blank
fill in the blank
Internal failure fill in the blank
fill in the blank
External failure fill in the blank
fill in the blank
Not costs of quality fill in the blank
fill in the blank
Total $fill in the blank
fill in the blank
Determine the percentages of total costs that are valueadded and nonvalueadded.
Line Item Description Activity Cost Percent of Total
Department Cost
Valueadded $fill in the blank
fill in the blank
Nonvalueadded fill in the blank
fill in the blank
Total $fill in the blank
fill in the blank
The department has fill in the blank of
of its total costs as nonvalueadded. Internal failure costs represent fill in the blank of
of the total costs. This means there is significant opportunity for cost savings. External failure costs represent fill in the blank of
of the total department costs.Use the activity cost information to determine the percentages of total costs that are prevention, appraisal, internal failure, external failure, and not costs of quality producing product
Determine the percentages of total costs that are valueadded and nonvalueadded.
The department has
Percent of Total
Department Cost
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started