Posted: April 30th, 2016

# Prepare a multiple-year trend report for overall costs of quality?

2. Gibson, Inc., has developed ideal standards for four activities: labor, materials, inspection, and receiving.

Information is as follows:

Activity Activity Driver SQ AQ SP
Labor Hours 500 550 \$ 32
Materials Pounds 2,000 2,500 48
Inspection Inspection hours 0 375 22
Receiving Orders 60 75 800

The actual prices paid per unit of each activity driver were equal to the standard prices.

Required:

Complete the following cost report.

Labor \$_____________ \$_____________ \$____________

Materials _____________ _____________ ____________

Inspection _____________ _____________ ____________

Receiving _____________ _____________ ____________

Totals \$_____________ \$_____________ \$____________

3 Marshek Industries has the theoretical capability to produce 119,000 units per month but currently produces 102,000 units. The conversion cost for the month is \$3,750,000. There are 8,500 production hours available within the plant per month. In addition to processing time, to produce a unit takes 15 minutes of move time and 10 minutes of wait time.

Required:
1. Compute the theoretical and actual velocities per hour
2. Compute the theoretical and actual cycle times (minutes per unit produced)
3. Compute the MCE

4. At the beginning of the year, John Corporation initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:

2007 2008 2009 2010
Reilability engineering 8,000 10,000 15,000 25,000
Quality training 1,000 2,000 5,000 8,000
Packaging inspections 2,000 3,000 5,000 5,000
Product Acceptance 12,000 10,000 8,000 3,000
Rework 30,000 25,000 18,000 12,000
Reinspection 75,000 65,000 48,000 29,000
Customer complaints 100,000 85,000 62,000 51,000
Warranty and Repair 70,000 50,000 40,000 25,000

Required:
a. Prepare a multiple-year trend report for overall costs of quality
b. Prepare a multiple-year trend report for each category of quality costs

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