10/28/11

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Score: 41.67

out of 50 points (83.34%)

[The following information applies to the questions displayed below.]

Gunnison Supply provides the following information about resources: Cost Driver Rate Resources used Materials Energy Setups Purchasing Customer service Long-term labor Administrative Resources supplied Materials Energy Setups Purchasing Customer service Long-term labor Administrative $ Cost Driver Volume

12 per pound 14,000 pounds 51 per machine-hour 680 machine-hours 300 per setup 159 setups 240 per purchase order 160 purchase orders 150 per return 90 returns 74 per labor-hour 650 labor-hours 58 per labor-hour 830 labor-hours

$168,000 36,920 50,500 44,400 34,800 53,500 52,300

In addition, sales for the period totaled $580,000.

1.

award:

17 out of 17 points Required: (a) Compute unused resource capacity for each resource. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) Unused Resource Capacity $0 2,240 2,800 6,000 21,300 5,400 4,160

Materials Energy Setups Purchasing Customer service Long-term labor Administrative

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Worksheet

Learning Objective: 10-05 Distinguish between resources used and resources supplied.

Required: (a) Compute unused resource capacity for each resource. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) Unused Resource Capacity $ 0 1% 2,240 1% 2,800 1% 6,000 1% 21,300 1% 5,400 1% 4,160 1%

Materials Energy Setups Purchasing Customer service Long-term labor Administrative

Explanation:

Resources Resources Used Supplied Materials $ 168,000 $ 168,000 ($12 14,000) (given) Energy $ 34,680 $ 36,920 ($51 680) (given) Setups $ 47,700 $ 50,500 ($300 159) (given) Purchasing $ 38,400 $ 44,400 ($240 160) (given) Customer service $ 13,500 $ 34,800 ($150 90) (given) Long-term labor $ 48,100 $ 53,500 ($74 650) (given) Administrative $ 48,140 $ 52,300 ($58 830) (given)

Unused Resource Capacity $ 0 $ 2,240 $ 2,800 $ 6,000 $ 21,300 $ 5,400 $ 4,160

2.

award:

11.33 out of 17 points (b) Which of the following statement(s) are true? (Select all that apply.)
Unit-related costs typically have unused resources. Capacity related costs typically have little or no unused resources. Unit-related costs vary directly with output. Capacity related costs are long-term costs and cannot be changed quickly in the short term. Unused resource capacity is the difference between resources supplied and resources used. Learning Objective: 10-05 Distinguish between resources used and resources supplied.

Check All That Apply

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3.

award:

13.33 out of 16 points The following represents the financial information for Trovatore Corporation, a manufacturer of electronic components, for two months: Sales Costs Process inspection Scrap Quality training Warranty repairs Testing equipment Customer complaints Rework Preventive maintenance Materials inspection Field testing March $240,000 $ 1,800 1,800 18,900 4,300 6,900 2,800 17,000 12,700 7,300 9,700 April $210,000 $ 1,920 2,010 12,200 4,800 7,400 3,500 20,500 10,000 5,300 12,900

Required: (a) Classify these items into prevention (P), appraisal (A), internal failure (IF), or external failure (EF) costs. Process inspection Scrap Quality training Warranty repairs Testing equipment Customer complaints Rework Preventive maintenance Materials inspection Field testing P IF P EF A EF IF P P A

(b) Calculate the ratio of the prevention, appraisal, internal failure, and external failure costs to sales for March and April. (Round your answers to 1 decimal place. Omit the "%" sign in your response.) Prevention Appraisal Internal failure External failure March 17.0 69.1 7.8 2.9 % % % % April 14.0 9.6 10.7 3.9 % % % %

Worksheet

Learning Objective: 10-07 Describe how activities that influence quality affect costs and profitability.

Learning Objective: 10-08 Compare the costs of quality control to the costs of failing to control quality.

The following represents the financial information for Trovatore Corporation, a manufacturer of electronic components, for two months: Sales March $240,000 April $210,000
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Sales Costs Process inspection Scrap Quality training Warranty repairs Testing equipment Customer complaints Rework Preventive maintenance Materials inspection Field testing

$240,000 $ 1,800 1,800 18,900 4,300 6,900 2,800 17,000 12,700 7,300 9,700

$210,000 $ 1,920 2,010 12,200 4,800 7,400 3,500 20,500 10,000 5,300 12,900

Required: (a) Classify these items into prevention (P), appraisal (A), internal failure (IF), or external failure (EF) costs. Process inspection Scrap Quality training Warranty repairs Testing equipment Customer complaints Rework Preventive maintenance Materials inspection Field testing P IF P EF A EF IF P P A

(b) Calculate the ratio of the prevention, appraisal, internal failure, and external failure costs to sales for March and April. (Round your answers to 1 decimal place. Omit the "%" sign in your response.) Prevention Appraisal Internal failure External failure March 17.0 1% 6.9 1% 7.8 1% 3.0 1% % % % % April 14.0 1% 9.7 1% 10.7 1% 4.0 1% % % % %

Explanation: (a)

Prevention: Process inspection, quality training, preventive maintenance, materials inspection. Appraisal: Testing equipment, field testing. Internal failure: Scrap, rework. External failure: Warranty repairs, customer complaints.
(b)

March Prevention $40,700 $240,000 $29,420 $210,000 Appraisal $16,600 $240,000 $20,300 $210,000 Internal failure $18,800 $240,000 $22,510 $210,000 External failure $7,100 $240,000 17.0%

April 14.0%

6.9% 9.7% 7.8% 10.7% 3.0%

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$8,300 $210,000

4.0%

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