SR Company manufactures two types of Computers, CX1 and CX2. The labour rates per hour for design
Question:
SR Company manufactures two types of Computers, CX1 and CX2. The labour rates per hour for design is $75 per hour while for that of testing and inspection is $40 per hour
Other information on each computer is given below
Rework costs per computer
Repair costs per computer
Estimated lost sales from poor quality Percentage of units reworked in plantPercentage of units repaired at customer's siteSelling price
Units manufactured and sold
Variable costs per unit
Hours spent on design
Testing and inspection hours/unit
Required:
CX1
$500
$600
-----
6%
4%
2,000 10,000 units 1,200
5,500 0.8
CX2
$400 $450 250 units 12%
8%
1,550 5,000 units
700 1,500 0.5
calculate the ratio of each (8 marks)
you have prepared in (1) (8 marks)
1.
2. 3
Prepare one cost of quality report for each type of computer; COQ category as a percentage of revenues.
Prepare one detailed written evaluation to accompany the reports above and make necessary recommendations.
The company uses a job-order costing system and manager is not sure the treatment of rework labour cost and disposal of defective products in the accounting system. Please
Cost Accounting A Managerial Emphasis
ISBN: 978-0133392883
6th Canadian edition
Authors: Horngren, Srikant Datar, George Foster, Madhav Rajan, Christ