Castledale Company reported sales of $7,000,000 in 20X1. At the end of the fiscal year (September 30,

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Castledale Company reported sales of $7,000,000 in 20X1. At the end of the fiscal year (September 30, 20X1), the following quality costs were reported:

Vendor certification............................................. $ 60,900
Warranty................................................................ 140,000
Rework................................................................... 175,000
Continuing supplier verification........................... 75,600
Quality training....................................................... 79,100
Process acceptance................................................ 56,000
Design changes..................................................... 105,000
Recalls..................................................................... 126,000
Product inspection.................................................. 64,400
Discounts due to defects....................................... 98,000


Required:
1. Prepare a quality cost report.
2. The president of Castledale wants visualization of the data found in the quality cost report and has asked that a bar graph and pie chart be prepared to satisfy this request. Comment on the resulting distribution and discuss the value of data visualization.
3. Assuming sales of $7,000,000, by how much would profits increase if quality improves so that quality costs are only 3% of sales?

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Managerial Accounting The Cornerstone Of Business Decision Making

ISBN: 9780357715345

8th Edition

Authors: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

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