1.Eade Company\'s quality cost report is to be based on the following data: Liab
ID: 2423378 • Letter: 1
Question
1.Eade Company's quality cost report is to be based on the following data: Liability arising from defective products $39,000 Lost sales due to poor quality $13,000 Test and inspection of in-process goods $20,700 Quality circles $63,600 Net cost of spoilage $66,000 Debugging software errors $66,100 Rework labor and overhead $18,500 Final product testing and inspection $46,400 Statistical process control activities $39,700 What would be the total external failure cost appearing on the quality cost report? $202,600 $79,100 $373,000 $52,000
2.Buckeye Company has provided the following data for maintenance cost: Prior Year Current Year Machine hours 16,400 18,900 Maintenance cost $36,500 $39,250 Maintenance cost is a mixed cost with variable and fixed components. The fixed and variable components of maintenance cost are closest to: $20,790 per year plus $.909 per machine hour $36,500 per year plus $1.10 per machine hour $18,460 per year plus $.909 per machine hour $18,460 per year plus $1.10 per machine hour
3.Compute the amount of raw materials used during August if $39,000 of raw materials were purchased during the month and the inventories were as follows: Inventories Balance August 1 Balance August 31 Raw materials $3,500 $3,600 Work in process $12,000 $10,000 Finished goods $18,000 $16,000 $46,100 $38,900 $13,600 $10,000
4.The following costs were incurred in September: Direct materials $39,300 Direct labor $23,600 Manufacturing overhead $22,200 Selling expenses $14,000 Administrative expenses $30,800 Prime costs during the month totaled: $129,900 $45,800 $62,900 $85,100 5.The following costs were incurred in September: Direct materials $42,000 Direct labor $34,200 Manufacturing overhead $22,400 Selling expenses $26,100 Administrative expenses $34,400 Conversion costs during the month totaled: $159,100 $56,600 $76,200 $64,400
Explanation / Answer
Answer 2: Variable cost = Difference in the mixed cost/difference in the machine hours
= ($39250 - $36500)/(18900-16400)
= 1.1 per hr
So total variable cost of current year = 1.1 * 18900 hrs i.e. $20790
Fixed cost = Mixed cost - variable cost
= 39250 - 20790 i.e. $18460
Answer 3: Raw material used = Opening inventory of raw material + Purchases- Closing inventory of raw material
= $3500 + $39000 - $3600 i.e. $38900
Answer 4:Prime cost = Raw Material Cost + Labor Cost
= $39300 + $23600 i.e. $62900
Conversion Cost = Labor cost + Overheads
= $34200 + $22400 i.e. $56600
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