10-122
122.
The following represents the financial information of Fabriz Corporation, a manufacturer of
electronic components, for two months:
March
April
$539,000
$495,000
3,300
3,760
3,700
3,860
37,600
26,000
8,600
9,600
14,000
14,000
5,600
6,800
34,000
37,000
27,000
19,000
13,000
9,600
18,800
24,800
10-124
123.
Categorize each of the following quality activities by placing an X in the appropriate
column.
Required:
Prevention
Appraisal
Internal
Failure
External
Failure
1.
Inspecting
raw
materials
received
from
vendors
2.
Cost (net)
of
materials
wasted
during
production
3.
Gathering,
analysis,
and
reporting
quality data
4.
Repairing
and/or
replacing
products
under
warranty
5.
Testing
product in
use at
customer
sites
10-125
10-126
124.
Categorize each of the following quality activities by placing an X in the appropriate
column.
Required:
10-127
10-129
125.
The following represents the financial information of Madison Tool Corporation, a
manufacturer of testing equipment:
May
Customer complaints
$11,200
Field testing
37,600
Materials inspection
26,000
Preventive maintenance
54,000
Process inspection
6,600
Quality training
75,200
Rework
68,000
Scrap
7,400
Testing equipment
28,000
Warranty repairs
17,200
10-131
126.
The following represents quality cost data for Monnett Corporation:
Field testing
$67,100
Finished goods inspection
48,700
Materials inspection
37,000
Preventive maintenance
54,000
Process inspection
46,900
Product design
96,700
Product liability insurance
48,000
Quality training
75,200
Rework
68,000
Scrap
17,400
Testing equipment
36,000
Warranty repairs
77,200
10-133
127.
Fine Grape produces premium wine. Its success in the industry is due to its quality,
although all of its customers, wine shops and specialty grocery stores, are very cost
conscious and negotiate for price cuts on all large orders. Noting that the wine industry is
becoming increasingly competitive, Fine Grape is looking for a way to meet the challenge.
It is negotiating with Culinary Delights, a regional specialty grocery store, to purchase a
large order of wine. Fine Grape is currently producing at under-capacity and would like to
keep its production facilities, gaining better economies of scale by increasing production.
Culinary Delights has agreed to a large order but only at a price of $39 per bottle. The
special order can be purchased in one batch with available capacity. Fine Grape prepared
these data: Next month’s operating information (per unit, for 10,000 bottles, made in 10
batches of 1,000 each)
Sales price
$55
Per unit costs
Variable manufacturing costs
22
Batch-level costs
5
Variable marketing costs
10
Fixed manufacturing costs
6
Fixed marketing costs
2
Special order information (order is
produced in one batch)
Sales units
2,000
Sales price per bottle
$39
No variable marketing costs are associated with this order, but Fine Grape has spent
$2,500 during the past two months trying to get Culinary Delights to purchase the special
order.
Required:
(1) How much will the special order change Fine Grape’s total operating income?
(2) How much would the special order change Fine Grape’s total operating income if fine
Grape is operating at full capacity and would lose the sale of the 2,000 bottles to regular
customers?
10-134
10-136
128.
Joseph Hutton Enterprises has met all production requirements for the current month and
has an opportunity to produce additional units of product with its excess capacity. Unit
selling prices and costs for three models of one of its product lines are as follows:
No
Frills
Standard
Options
Super
Selling price
$35.00
$45.00
$65.00
Direct materials
10.00
12.00
14.00
Direct labor ($15/hr.)
7.50
12.00
21.00
Variable Overhead
4.00
6.40
11.20
Fixed Overhead
3.00
5.00
5.00
Selling price
10-138
129.
10-140
130.
Stonehouse Corporation developed the following information regarding quality for the first
quarter of the year 2016:
Sales
$6,800,000
Wasted time
$285,600
Training
$102,000
Inspecting materials
$340,000
Performance reviews
$85,000
Resolving customer complaints
$38,760
Certifying suppliers
$170,000
Total
$1,021,360
Sales
Training