Question
Nuke-It-Now manufactures microwave ovens. The following represents the financial information from one of its manufacturing plants for two years. Year 1 Year 2 Sales $
Nuke-It-Now manufactures microwave ovens. The following represents the financial information from one of its manufacturing plants for two years.
| Year 1 | Year 2 | |||||
| Sales | $ | 3,590,000 | $ | 3,880,000 | ||
| Costs | ||||||
| Redesign process | $ | 30,000 | $ | 37,200 | ||
| Discard defective units | 37,500 | 43,400 | ||||
| Training on equipment | 247,000 | 213,000 | ||||
| Warranty claims | 131,000 | 178,000 | ||||
| Contract cancellations | 202,000 | 162,000 | ||||
| Rework | 72,000 | 93,000 | ||||
| Preventive maintenance | 124,000 | 160,000 | ||||
| Product liability claims | 307,000 | 172,000 | ||||
| Final inspection | 203,000 | 204,000 | ||||
Required:
a. Classify these items into Prevention, Appraisal, Internal failure, or External failure costs.
|
b. Calculate the ratio of the prevention, appraisal, internal failure, and external failure costs to sales for year 1 and year 2.
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Managing Financial Resources
Authors: Mick Broadbent, John Cullen
3rd Edition
1138134546, 978-1138134546
