Question
Finn Corporation produces inflatable rafts for recreational use. The company has heard about lean accounting, and is anxious to find out more about the system,
Finn Corporation produces inflatable rafts for recreational use. The company has heard about lean accounting, and is anxious to find out more about the system, to determine whether it will help streamline their operations and cut costs.
The company has hired you as a consultant to help them implement their lean accounting program, and also to assist with recreating some data lost in a recent computer mishap.
This year, Finn Corporation implemented programs designed to assess the costs of quality for the company. However, the company recently suffered a data loss, and some of its records have been either partially or completely erased. The accounting intern for Finn Corporation has located a copy of a recent cost of quality report, shown as follows, but the quality activity analysis used to create the report has been lost.
Finn Corporation |
Cost of Quality Report |
1 | Quality Cost Classification | Quality Cost | Percent of Total Quality Cost | Percent of Total Sales |
2 | Prevention | $193,440.00 | 62.0% | 16.1% |
3 | Appraisal | 46,800.00 | 15.0 | 3.9 |
4 | Internal failure | 40,560.00 | 13.0 | 3.4 |
5 | External failure | 31,200.00 | 10.0 | 2.6 |
6 | Total | $312,000.00 | 100.0% | 26.0% |
As mentioned on the Cost of Quality Report panel, Finn Corporation recently suffered a data loss, and some of its records have been lost. After reviewing the Cost of Quality Report panel, recreate the quality activity analysis in the following table from which the cost of quality report was created.
Finn Corporation |
Quality Activity Analysis |
1 | Rework |
|
2 | Inspecting incoming raw materials |
|
3 | Warranty work |
|
4 | Process improvement effort |
|
5 | Total activity cost | $312,000.00 |
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