At the beginning of year 1 kare company initiated a quality

Assignment Help Accounting Basics

Reference no: EM13482617

At the beginning of Year 1, Kare Company initiated a quality improvement program. Considerable effort was expended over two years to reduce the number of defective units produced. By the end of the second year, reports from the production manager revealed that scrap and rework had both decreased. The president of the company was pleased to hear of the success but wanted some assessment of the financial impact of the improvements. To make this assessment, the following financial data were collected for the two years.

	Year 1		Year 2
Sales	$	10,000,000	$	10,000,000
Scrap		400,000		300,000
Rework		600,000		400,000
Product inspection		100,000		125,000
Product warranty		800,000		600,000
Quality training		40,000		80,000
Materials inspection		60,000		40,000

a.	Classify the costs as prevention, appraisal, and internal and external failure.


Scrap
Rework
Product inspection
Product warranty
Quality training
Materials inspection

b-1	Compute total quality cost as a percentage of sales for each of the two years. (Round your answers to 2 decimal places. Omit the "%" sign in your response.)

	Percent of sales
Year 1	%
Year 2	%

b-2	By how much has profit increased because of quality improvements between Year 1 and Year 2? (Omit the "$" sign in your response.)

Profit increase

Reference no: EM13482617

Questions Cloud

For august mcguire manufactering estimated sales revenue at : for august mcguire manufactering estimated sales revenue at 200000. it pays sales comissions that are 4 of sales. the

Total cash dividends of 8000 were declared and paid : at the end of 1999 the total assets of dole corp were 90000 and total liabilities were 50000. the company has been in

Each of the items listed below can be found in the : each of the items listed below can be found in the operating section of the statement of cash flows. indicate whether

Thomas desires to have 20 of the following months sales : how complete a sale budget for quatrer when the sales are 20sales budget for the 3rd quarter

At the beginning of year 1 kare company initiated a quality : at the beginning of year 1 kare company initiated a quality improvement program. considerable effort was expended over

For august mcguire manufactering estimated sales revenue at : for august mcguire manufactering estimated sales revenue at 200000. it pays sales comissions that are 4 of sales. the

How many units must be sold to break even what is the total : rush company developed the following information for

Fredonia inc had a bad year in 2013 for the first time in : fredonia inc. had a bad year in 2013. for the first time in its history it operated at a loss. the companys income

The buyer who purchases and takes ownership of : 1 the buyer who purchases and takes ownership of anothercompanys accounts receivable is called aa payerb pledgorc

User Account

All Pages