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Category > Accounting Posted 13 May 2017 My Price 8.00

The president of Mission Inc.

 

The president of Mission Inc. has been concerned about the growth in costs over the last several years. The president asked the controller to perform an activity analysis to gain a better insight into these costs. The activity analysis revealed the following:

activities

activity Cost

Correcting invoice errors

$    7,500

Disposing of incoming materials with poor quality

15,000

Disposing of scrap

27,500

Expediting late production

22,500

Final inspection

20,000

Inspecting incoming materials

5,000

Inspecting work in process

25,000

Preventive  machine maintenance

15,000

Producing product

97,500

Responding to customer quality complaints

     15,000

Total

$250,000

 

The production process is complicated by quality problems, requiring the production manager to expedite production and dispose of    scrap.

Instructions

1.     Prepare a Pareto chart of the company activities.

2.     Classify the activities into prevention, appraisal, internal failure, external failure, and not costs of quality (producing product). Classify the activities into value-added and non-value added activities.

3.     Use the activity cost information to determine the percentages of total costs that are prevention, appraisal, internal failure, external failure, and not costs of quality.

4.     Determine the percentages of total costs that are value- and non-value-added.

5.                                  Interpret the information.

 

 
 

Answers

Alpha Geek
(8)
Status NEW Posted 13 May 2017 06:05 AM My Price 8.00

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Attachments

file 1494655492-Answer.docx preview (256 words )
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