Question

Identify the four categories of quality costs. In addition, identify one cost that might be classified in each of the categories for a manufacturer.

1).

2).

3).

4).

2. Identify the four primary responsibilities of managers. In addition, give one example of each.

1)

2)

3)

4)

3. What are considered Prime cost?

4. What are considered conversion costs?

Answer 1

Ans-1-1)-Prevention costs.:-

Prevention costs can include proper employee training in assembling products and statistical process control as well as a robust product design and supplier certification.

2)-Appraisal Costs:-

As was the case with a prevention cost, you incur an appraisal cost in order to keep a quality problem from occurring. This is done through a variety of inspections. appraisal costs include the destruction of goods as part of the testing process, the depreciation of test equipment, and supervision of the testing staff.

3)-Internal failure costs:-

An internal failure cost is incurred when a defective product is produced. This appears in the form of scrapped or reworked goods. The cost of reworking goods is part of this cost.

4)-External failure costs:-

An external failure cost when a defective product was produced, but now the cost is much more extensive, because it includes the cost of product recalls, warranty claims, field service, and potentially even the legal costs associated with customer lawsuits.

Answer-2-1)-Planning: This step involves mapping out exactly how to achieve a particular goal. Say, for example, that the organization's goal is to improve company sales. The manager first needs to decide which steps are necessary to accomplish that goal. These steps may include increasing advertising, inventory, and sales staff.

2)-Organizing: After a plan is in place, a manager needs to organize her team and materials according to her plan. Assigning work and granting authority are two important elements of organizing.

3)-Staffing: After a manager discerns his area's needs, he may decide to beef up his staffing by recruiting, selecting, training, and developing employees. A manager in a large organization often works with the company's human resources department to accomplish this goal.

4)-Leading: A manager needs to do more than just plan, organize, and staff her team to achieve a goal. She must also lead. Leading involves motivating, communicating, guiding, and encouraging. It requires the manager to coach, assist, and problem solve with employees.

Answer-3-

In cost accounting, the prime cost of a manufactured product is the combination of the following:

• Direct materials cost
• Direct labor cost

Prime costs are the costs directly incurred to create a product or service. These costs are useful for determining the contribution margin of a product or service, as well as for calculating the absolute minimum price at which a product should be sold. However, since prime costs do not include overhead costs, they are not good for calculating prices that will ensure long-term profitability.

Examples of prime costs are:

• Direct materials

• Piece rate pay

• Service labor

• Commission

Answer-4-

conversion costs are all manufacturing costs except for the cost of raw materials. Examples of costs that may be considered conversion costs are:

• Direct labor and related benefits and payroll taxes

• Equipment depreciation

• Equipment maintenance

• Factory rent

• Factory supplies

• Factory insurance