Anna-Greta Lantto, the assistant controller of Kiruna AB had recently prepared the following quality report comparing 2022

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Anna-Greta Lantto, the assistant controller of Kiruna AB had recently prepared the following quality report comparing 2022 and 2021 quality performances.image text in transcribed

Just two days after preparing the report, Lars Törnman, the controller, had called Lantto into his office. ‘Our plant manager, Sven Töyr, is quite upset with the recent costs of quality and nonfinancial measures of quality reports that you prepared. He feels his workers have made significant progress in improving quality at the plant but that our reports are just not showing this. He wants to apply for various quality awards that would bring a lot of prestige to Kiruna, but he obviously cannot do so on the basis of the numbers we are reporting. Can you look over these quality numbers and see what you can do? I think Sven has a point. Nobody wants Kiruna to miss out on all the wonderful press we’d get if we won one of these quality awards.’ Lantto is quite certain that her numbers are correct. Yet she would very much like Kiruna to win these prestigious quality awards. She is confused about how to handle Törnman’s request.
Required

1 Calculate the ratio of each costs of quality category (prevention, appraisal, internal failure and external failure) to sales in 2021 and 2022.
2 What do the reports indicate about the plant’s quality performance?
3 Is Lars Törnman’s suggestion to Lantto to recalculate her quality numbers unethical? Would it be unethical for Lantto to modify her analysis? What steps should Lantto take to resolve this situation?

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Management And Cost Accounting

ISBN: 9781292436029

8th Edition

Authors: Alnoor Bhimani, Srikant Datar, Charles Horngren, Madhav Rajan

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