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Managerial Accounting: Computing Costs

Please help me answer the following Sheltie Manufacturing and Trimline Frames questions.

See attached file.


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Please make a note of the points and assumptions given for question 2.

MSW 3.1.
The following information was received from Sheltie Manufacturing.
Warranty claims $170,000
Product liability lawsuits 200,000
Rework costs 600,000
Quality training 355,000
Inspection of incoming material 900,000
Statistical process control 650,000
Waste 390,000
Product quality audits 485,000

Total sales $50,000,000

a. Compute the total prevention costs ⇒ $1,490,000
b. Compute the total appraisal costs ⇒ $900,000
c. Compute the total internal failure costs ⇒ $990,000
d. Compute the total external failure costs ⇒ $370,000

a. Total prevention costs
Quality training + Statistical process control + Product quality audits
⇒ 355,000 + 650,000 + 485,000
⇒ 1,490,000

b. Total appraisal costs
Inspection of incoming materials
⇒ 900,000

c. Total internal failure costs
Rework costs + Waste
⇒ 600,000 + 390,000
⇒ 990,000

d. Total external failure costs
Product liability lawsuits + Warranty claims
200,000 + 170,000
⇒ 370,000

MSW 3-3
Quality improvement. Trimline Frames makes bicycle frames in two processes, tubing and welding. The tubing process has a capacity of 50,000 units per year; welding has a capacity of 75,000 units per year. Cost information follows:

Design of product and process costs $100,000
Inspection and testing costs 42,500
Scrap costs (all in the tubing dept.) 175,000

The company enjoys high demand for its products. Trimline Frames can sell whatever output it can produce for the market price of $60 per frame. Trimline ...

Solution Summary

The solution assists with computing costs for Sheltie Manufacturing and Timeline Frames questions.