/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q44PGB Question:聽Roxi, Inc. is using a... [FREE SOLUTION] | 91影视

91影视

Question:Roxi, Inc. is using a costs-of-quality approach to evaluate design engineering efforts for a new skateboard. Roxi鈥檚 senior managers expect the engineering work to reduceappraisal, internal failure, and external failure activities. The predicted reductionsin activities over the two-year life of the skateboards follow. Also shown are thepredetermined overhead allocation rates for each activity.


Activity

Predicted Reduction in Activity Units

Predetermined Overhead Allocation Rate per unit

Inspection of incoming raw materials

395

\( 44

Inspection of finished goods

395

26

Number of defective units discovered in-house

1,500

54

Number of defective units discovered by customers

275

73

Lost profits due to dissatisfied customers

100

103

Requirements

1. Calculate the predicted quality cost savings from the design engineering work.

2. Roxi spent \)106,000 on design engineering for the new skateboard. What is the net benefit of this 鈥減reventive鈥 quality activity?

3. What major difficulty would Roxi鈥檚 managers have in implementing this costs-of quality approach? What alternative approach could they use to measure quality improvement?

Short Answer

Expert verified

Predicted quality cost savings:$115,620

Net Benefit of design engineering:$12,620

Alternative approaches to COQ 鈥 Poor quality cost, Total quality cost, Qualified Function Development

Step by step solution

01

Step-by-Step-SolutionStep1: Calculation of predicted quality cost savings

Activity

Predicted reduction in activity units

Allocation rate per unit

Predicted quality cost savings

Inspection of incoming raw material

390

44

$17,160

Inspection of finished goods

390

19

$7,410

Number of defective units discovered in house

1200

50

$60,000

Number of defective units discovered by customers

325

72

$23,400

Lost profits due to dissatisfied customers

75

102

$7,650

Total predicted quality cost savings

$115,620

02

Calculation of net benefit of preventive quality activity

Total predicted quality cost savings: $115,620

Amount spent on design engineering: $103,000

Netbenefitofdesignengineering=Totalpredictedqualitycostsavings-Amountspentondesignengineering=$115,620-$103,000=$12,620

03

Major difficulty in implementing the cost-of-quality approach and its alternatives

The difficulties in implementing the COQ approach are as follows 鈥

1) Measuring the quality cost is the major difficulty as every cost cannot be measured like profit loss due to unhappiness of customers.

2) Another difficulty in implementing this approach is the lack of knowledge of using this approach efficiently.

3) Another difficulty arises due to the lack of needed tools to collect, organize, filter, and report quality costs.

Alternative approaches to COQ

Alternative approaches to COQ are as follows 鈥

1) Poor Quality cost 鈥 This is the improved model and ignores the prevention and appraisal costs as they are problematic to measure.

2) Total cost of quality 鈥 TCOQ model differs from COQ in the sense that TCOQ does not include maintenance and quality training costs as in the COQ model. Thus it is not a preferred model as that of COQ.

3) Qualified function development 鈥 QFD was developed to understand the customer requirements and maximize the quality positively by creating a comprehensive quality system.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Activity-based costing requires four steps. List the four steps in the order they are performed.

Clason, Inc. manufactures door panels. Suppose Clason is considering spending the following amounts on a new total quality management (TQM) program:

___________________________________________________________________

Strength-testing one item from each batch of panels \( 68,000

Training employees in TQM 27,000

Training suppliers in TQM 39,000

Identifying suppliers who commit to on-time delivery of

perfect-quality materials 58,000

Clason expects the new program would save costs through the following:

___________________________________________________________________

Avoid lost profits from lost sales due to disappointed customers \) 86,000

Avoid rework and spoilage 63,000

Avoid inspection of raw materials 57,000

Avoid warranty costs 15,000

Requirements

1. Classify each cost as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost.

2. Should Clason implement the new quality program? Give your reason.

Answer

The Oakman Company (see Short Exercise S19-1) has refined its allocation system by separating manufacturing overhead costs into two cost pools鈥攐ne for each department. The estimated costs for the Mixing Department, \(510,000, will be allocated based on direct labor hours, and the estimated direct labor hours for the year are 170,000. The estimated costs for the Packaging Department, \)300,000, will be allocated based on machine hours, and the estimated machine hours for the year are 40,000. In October, the company incurred 38,000 direct labor hours in the Mixing Department and 10,000 machine hours in the Packaging Department.

Requirements

2. Determine the total amount of overhead allocated in October.

Question:Refer to Exercises E19-24 and E19-25. Suppose Western鈥檚 direct labor rate was $280 per hour. The Halbert engagement used the following resources last month:

Allocation Base Halbert

Direct labor hours 170

Pages 310

Applications used 80

Requirements

1. Compute the cost assigned to the Halbert engagement, using the ABC system.

2. Compute the operating income or loss from the Halbert engagement, using theABC system.

Rennie Plant Service completed a special landscaping job for Brenton Company. rennie uses ABC and has the following predetermined overhead allocation rates:

Activity Predetermined

Allocation Base Overhead Allocation Rate

Designing Number of designs \( 290 per design

Planting Number of plants \) 20 per plant

The Rennie job included \(1,500 in plants; \)800 in direct labor; one design; and 30 plants.

Requirements

2. If Brenton paid $3,690 for the job, what is the operating income or loss?

See all solutions

Recommended explanations on Business Studies Textbooks

View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.