Question

Moreno Inc. produces two different types of cars and is concerned about their quality. The company has identified the following quality activities and costs associated with the two products:

Car A 229,000 Units Produced / CAR A Warranty Work (units) 4,510 / CAR A Scrapped Units (numbers) 3,090 / CAR A Inspection (hours) 790 / CAR A Quality Training (hours) 55
Car B 382,000 Units produced / CAR B Warranty Work (units) 1,350 / CAR B Scrapped Units (numbers) 990 / CAR B Inspection (hours) 1,245 / CAR B Quality Training (hours)
Quality Training (hours) 55 105 Activities: Performing Warranty Work $562,300 Scrapping Units 891,450 Inspecting 192,660 Quality Training 101,400
Calculate the quality cost per unit for each product

Answer 1

To calculate the quality cost per unit for each product, divide the total cost for each activity by the number of units produced for that product.

Step-by-step explanation:

To calculate the quality cost per unit for each product, we need to divide the total cost for each activity by the number of units produced for that product. For Car A:

• Warranty Work cost per unit = $562,300 / 4,510 units = $124.50
• Scrapping Units cost per unit = $891,450 / 3,090 units = $288.32
• Inspection cost per unit = $192,660 / 790 hours = $244.05
• Quality Training cost per unit = $101,400 / 55 hours = $1,843.64

Similarly, for Car B:

• Warranty Work cost per unit = $562,300 / 1,350 units = $416.15
• Scrapping Units cost per unit = $891,450 / 990 units = $900.00
• Inspection cost per unit = $192,660 / 1,245 hours = $154.78
• Quality Training cost per unit = $101,400 / 105 hours = $966.67