Reference no: EM133694385

Question: On average, RC produces Reliable Components (RC) manufactures and sells electrical component ntly operating with excess capacity and the cost per unit for each 5,000,000 components per year. RC is curre component is $10. 8% common to all jobs. The quality Under current production conditions, the company has a normal spoilage rate of ction process, identifies 60% of the spoiled units. control inspection which takes place at the end of the produ Spoiled units cannot be reworked or repaired and must be discarded at a disposal cost of $0.05 per unit. An additional 35% of the totaled spoiled units are discovered by customers and these units cost $6.00 each for their replacement and their disposal. The other 5% of the spoilage is not found, either because the defects are minor or because the components are never used. its reputation. The president of RC has talked with a quality RC believes that it must improve its quality to enhance control consultant and determined that if he revised his quality control procedures, introducing earlier inspection As well, 75% and educating the workers to continuous quality awareness, he could reduce the spoilage rate to 7%. of the spoilage would be found by the end of the production process. It is predicted that customers would find an additional 20% of the spoilage. Required: Prepare the journal entries to account for the normal spoilage costs under the current operating environment.

Based on all the probabilities given above, what is the maximum amount that RC should be willing to pay for the improved quality control system proposed. You must provide a dollar amount and show your work