Known:

Salaries of 14 employees $ 504,000

therefore hours per
Setup hours capacity 28000 employee =
Value added standard hours (SQ) 2000

Answer

1 SP (standar price) --> standard salaries per hours $ 18 per setup hour
SQ (standard quantity) --> activity capacity that should
be used 2000 hours
AQ (actual quantity) --> activity capacity acquired 28000 hours
AU (actual usage) --> actual usage of the capacity 26200 hours
Value Added
Activity (SP X SQ)

36000
Non Value Added or
Volume Variances
468000

Value Added Non Value Added or

2 Activity (SP X SQ) Volume Variances
Setup 36000 468000
Highlighting the non value added cost is important because the non value added activities doesn’t increase the cuss

3 When the company able to reduce the demand for the setup activity from 26.200 to 4.000 hours:
Remember that one employee can get 2.000 hours, therefore in actual cost condition, the company needs 14 emplo
employees (26.200 hours:2.000 hours is more than 13)
Therefore when it is stated become 4.000 hours, then the employee needed is 2 employees (4.000 hours : 2000 hou
hours x $ 18 = $432.000

4
Inspection is non value added activity as it doesn't give any impact to the customer's value. Actually, when the comp
to do inspection and also the unnecessary activities such as rework, reordering, and others.
 2000

Actual Cost (SP X AQ) Actual Used (SP X AU)

504000 471600
Unused Capacity
Variance
32400

Actual Cost (SP X AQ)

504000
doesn’t increase the cusstomer value, so non value added cost should be reduced or eliminated

ompany needs 14 employees, whiile in actual used condition, the company still need 14

(4.000 hours : 2000 hours). The effect is the company can reduce the cost amounted 12 employees x 2.000

Actually, when the company can choose a good supplier to supply good material component, they don't need
 2015 2016
field trials 450,000 900,000 prev
recalls 600,000 300,000 ext
reinspection 300,000 150,000 int
packaging inspection 180,000 120,000 app
quality training 120,000 300,000 prev
process acceptance - 150,000 app
retesting 435,000 105,000 int
lost sales (estimated) 900,000 600,000 int
Product inspection 150,000 90,000 app
Complaint adjustment 465,000 285,000 ext
TOTAL 3,600,000 3,000,000

1 Quality cost report 2015 2016 Difference

prevention
field trials 450,000 900,000
quality training 120,000 300,000
570,000 1,200,000 630,000
appraisal
packaging inspection 180,000 120,000
process acceptance - 150,000
Product inspection 150,000 90,000
330,000 360,000 30,000
internal
reinspection 300,000 150,000
retesting 435,000 105,000
lost sales (estimated) 900,000 600,000
1,635,000 855,000 -780,000
external
recalls 600,000 300,000
Complaint adjustment 465,000 285,000
1,065,000 585,000 -480,000

2 a. 660.000 (630rb + 30rb)

b. 1.260.000 (780rb + 480rb)
Good job, because by investing 660.000 can generate 1.260.000 in return
An increase in prevention and appraisal costs resulted in fewer defects, and
therefore, resulted in a decrease in internal and external failure costs.

3 5% x 18.000.000 = 900.000
not realistic, because with the same amount of sales, Masaki only wants to pay QC by 900.000
in facts, by 2016, the quality cost that Masaki has to pay is still 3.000.000
y QC by 900.000
 2016 2017
Output 192,000 240,000
Power (quantity used) 24,000 24,000
Materials (quantity used) 48,000 70,000
Unit price (power) $ 1.00 $ 2.00
Unit price (materials) $ 4.00 $ 5.00
Unit selling price $ 2.00 $ 2.50

1 Partial operational productivity ratios

Power (X) 192,000/24,000 8
Productivity 2016
Material (Y) 192,000/48,000 4
Power (X) 240,000/24,000 10
Productivity 2017
Material (Y) 240,000/70,000 3.4285714286
Productivity improved for X but not for Input Y. We cannot say what hap-pened to overall productivity using partial
aremixed

2 Profit-linked productivity measurement

Output Output P2017 x Price

2017/Productivity P2016 x Price 2017 2017/Productivity
in 2016 (P2016) in 2017 (P2017) 2017

Power (X) 30,000 $ 60,000 24,000 $ 48,000

Material (Y) 60,000 $ 300,000 70,000 $ 350,000
$ 360,000 $ 398,000
Profit decreased by $38,000 due to productivity changes

3 Profit recovery = Total Profit Charge - Productivity-induced change

Total profit change : (Sales - Total Costs)
2017 ($2.5 x 240,000) - ($2 x 24,000) - ($5 x 70,000) =
2016 ($2 x 192,000) - ($1 x 24,000) - ($4 x 48,000) =

Profit recovery = Total profit charge - Productivity induced charge

$34000 - (-$38,000)
$ 72,000.00
Profit recovery is the profit change that would have been realized without any changes in productivity
productivity using partial ratios because the signals

Difference

12,000
(50,000)
(38,000)

$ 202,000.00
$ 168,000.00
$ 34,000.00