93. The budgeted cell conversion cost rate includes which of the following?
94. Schedule of Activity Costs
Quality Control Activities
Activity Cost
Process audits
$50,000
Training of machine operators
28,000
Processing returned products
19,000
Scrap processing (disposal)
25,000
Rework
8,000
Preventative maintenance
30,000
Product design
46,000
Warranty work
12,000
Finished goods inspection
23,000
From the above schedule of activity costs, determine the total activity cost.
95. Schedule of Activity Costs
Quality Control Activities
Activity Cost
Process audits
$50,000
Training of machine operators
28,000
Processing returned products
19,000
Scrap processing (disposal)
25,000
Rework
8,000
Preventative maintenance
30,000
Product design
46,000
Warranty work
12,000
Finished goods inspection
23,000
96. Schedule of Activity Costs
Quality Control Activities
Activity Cost
Process audits
$50,000
Training of machine operators
28,000
Processing returned products
19,000
Scrap processing (disposal)
25,000
Rework
8,000
Preventative maintenance
30,000
Product design
46,000
Warranty work
12,000
Finished goods inspection
23,000
From the above schedule of activity costs, determine the value-added costs.
97. Schedule of Activity Costs
Quality Control Activities
Activity Cost
Process audits
$50,000
Training of machine operators
28,000
Processing returned products
19,000
Scrap processing (disposal)
25,000
Rework
8,000
Preventative maintenance
30,000
Product design
46,000
Warranty work
12,000
Finished goods inspection
23,000
From the above schedule of activity costs, determine the internal failure costs.
98. Schedule of Activity Costs
Quality Control Activities
Activity Cost
Process audits
$50,000
Training of machine operators
28,000
Processing returned products
19,000
Scrap processing (disposal)
25,000
Rework
8,000
Preventative maintenance
30,000
Product design
46,000
Warranty work
12,000
Finished goods inspection
23,000
From the above schedule of activity costs, determine the external failure costs.
99. Schedule of Activity Costs
Quality Control Activities
Activity Cost
Process audits
$50,000
Training of machine operators
28,000
Processing returned products
19,000
Scrap processing (disposal)
25,000
Rework
8,000
Preventative maintenance
30,000
Product design
46,000
Warranty work
12,000
Finished goods inspection
23,000
From the above schedule of activity costs, determine the appraisal costs.
100. Schedule of Activity Costs
Quality Control Activities
Activity Cost
Process audits
$50,000
Training of machine operators
28,000
Processing returned products
19,000
Scrap processing (disposal)
25,000
Rework
8,000
Preventative maintenance
30,000
Product design
46,000
Warranty work
12,000
Finished goods inspection
23,000
From the above schedule of activity costs, determine the prevention costs.
101. The local college is aggressively working in reducing the time that a student needs to enroll for each
semester. Which of the following changes would not help achieve this goal?
102. A college would like to increase enrollment by streamlining the enrollment process. Which of the
following would not fall in line with the college goal?
103. Which of the following statements is correct?
104. Which of the following is not a prevention cost?
105. Which of the following is not an external failure cost?
106. Which of the following statements best describes the relationship among the costs of quality?
107. Which of the following is a value-added activity?
108. Christmas Express makes wreaths in batch sizes of 12. The cutting & assembly process takes 7 minutes per
wreath and the decorating process time is 10 minutes per wreath. It takes 12 minutes to move the wreaths from
the cutting & assembly process to the decorating process.
(a) Compute the value-added, non-value-added, and the total lead time of the wreath process.
(b) Compute the value-added ratio. Round to the nearest decimal.
109. Which of the following are features of the just-in-time manufacturing system?
(a) maintaining excess inventory to ensure that products will always be available
(b) cross training of employees
(c) giving employees additional authority and responsibility
(d) product oriented layout
(e) increased set-up time
110. The Thudaka Company has budgeted its conversion cost for the small lamp production as $65,000 for
1,300 production hours. Each unit produced by the cell requires 15 minutes of process time. During the month,
3,800 units are manufactured in the cell. the estimated material cost is $18 per unit. Provide the following
journal entries.
(a) Materials are purchased to produce 4,000 units.
(b) Conversion costs are applied to 3,800 units of production.
(c) 3,650 units are placed into finished goods.
111. A quality control activity analysis indicated the following four activity costs of a hotel.
Verifying credit card information
$40,000
Customer service training
20,000
Discounting room rates due to poor customer service
16,000
Correcting charges to customer invoices
8,000
Total
$84,000
112. Connally Company’s payroll department required that every time card be checked twice to ensure pay
accuracy. The company has 1,000 employees and has determined that the checks cost the company $8,000 per
year. They have decided to change this policy and only check those names which appear on the exceptions
report and a random check on the entire payroll. Currently only 15% of the payroll is evaluated each payroll.
Determine the inspection activity cost per employee on the 1,000 employees both before and after the
improvement.
Cost of Quality Report
Prevention
$20,000
23.8%
2.7%
Appraisal
40,000
47.6%
5.3%
Internal Failure
16,000
19.1%
2.1%
External Failure
8,000
9.5%
1.1%
$84,000
100.0%
11.2%
113. Extreme Wreaths, Inc. makes wreaths in batch sizes of 15 at a time. The cutting & assembly process takes
10 minutes per wreath, and the decorating process time is 7 minutes per wreath. It takes 5 minutes to move the
wreaths from the cutting & assembly process to the decorating process.
In a effort to improve the lead time, the company has tried reducing the batch size to 10 units. The new process
is as follows: cutting & assembly process – 8 minutes. The decorating process is still 7 minutes per wreath. It
takes 5 minutes to move the wreaths from the cutting & assembly process to the decorating process.
(a) Compute the value-added, non-value-added, and the total lead time of the wreath process for both the old
and the new manufacturing process.
(b) Compute the value-added ratio for both the old and new process. Round to the nearest decimal.
114. Axelgold Company produces parts for the auto industry. Part X2 is machined in Department #1, which has
the following budgeted conversion costs:
Labor
$230,000
Depreciation
32,000
Maintenance
12,000
Supplies
26,000
Total
$300,000
All costs are driven by machine hours. Total possible hours for the year are 2,800. It takes .03 hours to machine one unit of Part X2.
(a)
Compute Department #1’s budgeted cell conversion cost rate for the current year.
Round to the nearest cent.
(b)
Compute Part X2’s budgeted cell conversion cost per unit. Round to the nearest cent.
115. Cariboo Pattern Company makes dressmakers’ patterns using a machine that stamps the pattern outline
onto tissue paper. The stamping center produced 40,000 patterns in August, with a machine time per pattern of
20 seconds. Annual budgeted cell conversion costs were as follows:
Maintenance and supplies
$ 650,000
Depreciation
700,000
Supporting labor
825,000
Total
$2,175,000
(a)
Budgeted cell conversion cost rate
= $300,000/2,800 hours
= $107.14 per machine hour
(b)
Part X2 machine hours
0.03
hrs. per unit
Budgeted cell conversion cost per unit
$ 3.21
per unit
116. Tucha Manufacturing Co. operates in a just-in–time (JIT) manufacturing environment. The company had
scheduled production of 95,000 units during February in its Y12 cell. Actual February production totaled
88,200 units. Tucha had budgeted conversion costs for February totaling $800,000 and budgeted production
hours totaling 2,000.
117. The Kwanika Co. operates in a just-in-time (JIT) manufacturing environment. During 2011, its first year of
operations, Kwanika budgeted for 40,000 hours in the production of 100,000 units in its cell X-22. Material
costs were $7 per unit. Cell X-22 conversion costs were budgeted for the year as follows:
Direct and indirect labor
$ 900,000
Machine depreciation
125,000
Maintenance and supplies
375,000
Utilities
225,000
Total
$1,625,000
During January, material for 8,400 units was purchased on account. There were 8,200 units manufactured and 8,000 were sold shipped to customers
for $35 each. Journalize: (a) the material purchases; (b) the application of conversion costs; (c) the transfer from work in process to finished goods;
and (d) the sales and associated cost of goods sold for the month of January.
Raw and In Process Inventory (8,400 ´ $7)
58,800
Accounts Payable
58,800
Raw and In Process Inventory (8,200 ´ $16.25)
133,250
Conversion Costs
133,250
Finished Goods Inventory (8,400 ´ $23.25)
190,650
Raw and In Process Inventory
190,650
Accounts Receivable (8,000 ´ $35)
280,000
Sales
280,000
Cost of Goods Sold (8,000 ´ $23.25)
186,000
Finished Goods Inventory
186,000
118. Schedule of Activity Costs
Quality Control Activities
Activity Cost
Product testing
$55,000
Assessing vendor quality
26,000
Recalls
18,000
Rework
29,000
Scrap disposal
8,000
Product design
30,000
Training machine operators
46,000
Warranty work
12,000
Process audits
22,000
From the above schedule, calculate the (a) value-added and (b) non-value-added costs.
119. Schedule of Activity Costs
Quality Control Activities
Activity Cost
Product testing
$55,000
Assessing vendor quality
26,000
Recalls
18,000
Rework
29,000
Scrap disposal
8,000
Product design
30,000
Training machine operators
46,000
Warranty work
12,000
Process audits
22,000
From the above schedule, calculate the (a) prevention and (b) appraisal costs.
120. Schedule of Activity Costs
Quality Control Activities
Activity Cost
Product testing
$55,000
Assessing vendor quality
26,000
Recalls
18,000
Rework
29,000
Scrap disposal
8,000
Product design
30,000
Training machine operators
46,000
Warranty work
12,000
Process audits
22,000
From the above schedule, calculate the internal failure costs.
121. Schedule of Activity Costs
Quality Control Activities
Activity Cost
Product testing
$55,000
Assessing vendor quality
26,000
Recalls
18,000
Rework
29,000
Scrap disposal
8,000
Product design
30,000
Training machine operators
46,000
Warranty work
12,000
Process audits
22,000
From the above schedule, calculate the external failure costs.
122. Schedule of Activity Costs
Quality Control Activities
Activity Cost
Product testing
$55,000
Assessing vendor quality
26,000
Recalls
18,000
Rework
29,000
Scrap disposal
8,000
Product design
30,000
Training machine operators
46,000
Warranty work
12,000
Process audits
22,000
From the above schedule, compute the percentage of non-value-added activities.