Week 2 Hw
Question 1.1
Tried and True Clothing has opened four new stores in college towns across the state. Data on monthly sales volume and labor hours are given below. Which store location has the highest labor productivity? Blacksburg 12,000/60=200
Problem 1-2
Tried and True’s accountant (from Problem 1-1) suggests that monthly rent and hourly wage rate also be factored into the productivity calculations. Annandale pays the highest average wage at $6.75 an hour. Blacksburg pays $6.50 an hour, Charlottesville $6, and Danville $5.50. The cost to rent store space is $1800 a month in Annandale, $2000 a month in Blacksburg, $1200 a month in Charlottesville, and $800 a month in Danville.
a. Which store is most productive?
b. Tried and True is not sure it can keep all four stores open. Based on multifactor productivity, which store would you close? What other factors should be considered?
a. Charlottesville is the most productive.
b. Based on productivity, the Blacksburg store should be closed. Other factors to consider include total revenue, potential for growth, and options for reducing costs.
Problem 2-1
Backwoods American, Inc., produces expensive water repellent, down-lined parkas. The company implemented a total quality-management program in 2005. Following are quality-related accounting data that have been accumulated for the five-year period after the program’s start..
a. Compute the company’s total failure costs as a percentage of total quality costs for each of the five years. Does there appear to be a trend to this result? If so, speculate on what might have caused the trend.
b. Compute prevention costs and appraisal costs, each as a percentage of total costs, during each of the five years. Speculate on what the company’s quality strategy appears to be.
c. Compute quality-sales indices and quality-cost indices for each of the five years. Is it possible to assess the effectiveness of the company’s quality-management program from these index values?
d. List
Tried and True Clothing has opened four new stores in college towns across the state. Data on monthly sales volume and labor hours are given below. Which store location has the highest labor productivity? Blacksburg 12,000/60=200
Problem 1-2
Tried and True’s accountant (from Problem 1-1) suggests that monthly rent and hourly wage rate also be factored into the productivity calculations. Annandale pays the highest average wage at $6.75 an hour. Blacksburg pays $6.50 an hour, Charlottesville $6, and Danville $5.50. The cost to rent store space is $1800 a month in Annandale, $2000 a month in Blacksburg, $1200 a month in Charlottesville, and $800 a month in Danville.
a. Which store is most productive?
b. Tried and True is not sure it can keep all four stores open. Based on multifactor productivity, which store would you close? What other factors should be considered?
a. Charlottesville is the most productive.
b. Based on productivity, the Blacksburg store should be closed. Other factors to consider include total revenue, potential for growth, and options for reducing costs.
Problem 2-1
Backwoods American, Inc., produces expensive water repellent, down-lined parkas. The company implemented a total quality-management program in 2005. Following are quality-related accounting data that have been accumulated for the five-year period after the program’s start..
a. Compute the company’s total failure costs as a percentage of total quality costs for each of the five years. Does there appear to be a trend to this result? If so, speculate on what might have caused the trend.
b. Compute prevention costs and appraisal costs, each as a percentage of total costs, during each of the five years. Speculate on what the company’s quality strategy appears to be.
c. Compute quality-sales indices and quality-cost indices for each of the five years. Is it possible to assess the effectiveness of the company’s quality-management program from these index values?
d. List