Exam 19: Balanced Scorecard: Quality and Time

Monticello Corp manufactures expensive tables.Its varnishing department is fully automated and requires substantial inspection to keep the machines operating properly.An improperly varnished table is very expensive to correct.Inspection hours for the 5800 tables varnished in September totaled 2000 hours by 12 employees.Eight quarts of varnish were used,on average,for each table.The standard amount of varnish per table is nine quarts.The cost of inspection for September was equal to the budgeted amount of $40,300. What is the inspection cost per unit? (Round the final answer to the nearest cent. )

Premier Corp expects to spend $800,900 in 2017 in appraisal costs if it does not change its incoming materials inspection method.If it decides to implement a new receiving method,it will save $60,500 in fixed appraisal costs and variable costs of $0.50 per unit of finished product.The new method involves $140,500 in training costs and an additional $150,300 in annual equipment rental. Internal failure costs average $250 per failed unit of finished goods.During 2016,6% of all completed items had to be reworked.External failure costs average $450 per failed unit.The company's average external failures are 2% of units sold.The company carries no ending inventories,because all jobs are on a per order basis and a just-in-time inventory ordering method is used. What would be the change in the external failure budget,if 600,300 units are used and assuming external failures are reduced by 12%.

When evaluating alternatives to improve quality,both the relevant benefits as well as the relevant costs should be considered.

Which of the following types of costs are incurred in precluding the production of products that do not conform to specifications?

A quality improvement program is very costly to implement across a large corporation.Why do they do it? Explain.

An example of a nonfinancial measure for customer satisfaction is ________.

Ventaz Corp manufactures glasses.The manufacturing cycle efficiency is 75%.What is its waiting time if the manufacturing lead time is 136 minutes per keyboard?

Alex is injured and rushed to Care Hospitals for treatment.He spent 76 minutes at the hospital out of which he filled a form for 25 minutes,stood in the queue for 19 minutes,doctor treated him for 18 minutes,and payment time was 14 minutes.What is the service cycle efficiency for his visit?

Monticello Corp manufactures expensive tables.Its varnishing department is fully automated and requires substantial inspection to keep the machines operating properly.An improperly varnished table is very expensive to correct.Inspection hours for the 5800 tables varnished in September totaled 1700 hours by 10 employees.Eight quarts of varnish were used,on average,for each table.The standard amount of varnish per table is nine quarts.The cost of inspection for September was equal to the budgeted amount of $40,100. The $40,100 represents a(n)________.

Without nonfinancial quality measures,________.

What is it that a statistical quality control chart does?

LaCrosse Products has a budget of $904,000 in 2017 for prevention costs.If it decides to automate a portion of its prevention activities,it will save $80,500 in variable costs.The new method will require $40,900 in training costs and $109,000 in annual equipment costs.Management is willing to adjust the budget for an amount up to the cost of the new equipment.The budgeted production level is 154,000 units. Appraisal costs for the year are budgeted at $610,000.The new prevention procedures will save appraisal costs of $50,100.Internal failure costs average $16 per failed unit of finished goods.The internal failure rate is expected to be 4% of all completed items.The proposed changes will cut the internal failure rate by one-third.Internal failure units are destroyed.External failure costs average $56 per failed unit.The company's average external failures average 4% of units sold.The new proposal will reduce this rate by 45%.Assume all units produced are sold and there are no ending inventories. How much will appraisal costs change assuming the new prevention methods reduce material failures by 40% in the appraisal phase?

Manufacturing cycle times affect both revenues and costs.

As per control charts,random variations would most likely occur when ________.

An important difference between financial measures of quality and nonfinancial measures of quality is that ________.

Which of the following is an advantage of nonfinancial measures of quality?

When considering how well a company is doing keeping customers happy and understanding their needs and wants,financial and nonfinancial measures can be used.

An example of a financial measure of customer satisfaction would be the percentage of defective products produced during a particular month.

Dawn and Kim just bought a bed and breakfast inn at a very attractive price.The business had been doing poorly.Before they reopened the inn for business,they attended a seminar on operating a high quality business.Now that they are ready to open the inn,they need some advice on quality costs and management. Required: Identify four categories of quality costs.In addition,identify three items that would be classified in each of the categories.

Premier Corp expects to spend $800,500 in 2017 in appraisal costs if it does not change its incoming materials inspection method.If it decides to implement a new receiving method,it will save $60,100 in fixed appraisal costs and variable costs of $0.50 per materials units received.The new method involves $140,600 in training costs and an additional $150,000 in annual equipment rental. Internal failure costs average $160 per failed unit of finished goods.During 2016,4% of all completed items had to be reworked.External failure costs average $430 per failed unit.The company's average external failures are 1% of units sold.The company carries no ending inventories,because all jobs are on a per order basis and a just-in-time inventory ordering method is used. What is the net effect on appraisal costs for 2017,assuming the new receiving method is implemented and that 800,500 material units are received?