QUIZ : MANAGEMENT ACCOUNTNG (90 MINUTES) CODE A 1. Explain why depreciation on an existing assets is always irrelevant. 2. One reason for inventory is to prevent shutdowns. How does the JIT approach to inventory management deal with this potential problem? 3. At the end of 2018, Rena Manufacturing began to focus on its quality costs. As a first step, it identified the following costs in its accounting records as being quality related. 2018 Sales (50,000 units @$120) $6,000,000 Scrap 180,000 Rework 240,000 Training program 72,000 Consumer complaints 120,000 Warranty 240,000 Test labor 180,000 Inspection labor 150,000 Supplier Evaluation 18,000 Required: a. Prepare a quality cost report by quality cost category. b. Calculate the relative distribution percentages for each quality ccost category. Comment on the distribution. 4. Smart, Inc., produced a variety of industrial producst in six factories. Each quarter, Harry, the president of Smart, Inc., made it a practice to look over the income statements for each factory. The following variable-costing income statement pertained to the Yoshe City Factory which produced and sold two products, Product A and Product B. Product A Product B Sales $100,000 $250,000 Less: Variable expenses 50,000 145,000 Contribution margin $ 50,000 $105,000 Less: Fixed expenses 80,000 110,000 Operating (loss) $(30,000) $ (5,000) Harry was distressed since this was the fifth consecutive quarter in which both products had shown a loss. Upon careful review, Harry discovered that $70,000 of the total fixed costs were common to both products; the common fixed costs are allocated to the individual products on the basis of sales revenues. Harry also was told that the products were substitutes for each other. If either product is dropped, the sales of the other product will increase; Product A's by 50 percent if B is dropped and B's by 25 percent if A is dropped. Required: a. Prepare a segmented income statement in proper form for the past quarter. b. Assume that Harry will choose among one of the following alternatives: 1) Keep both product 2) Drop both products 3) Drop Product A. 4) Drop Product B Which is the best alternative? Provide computational support