Pareto Chart and Cost of Quality Report for a Manufacturing Company The president of Mission Inc. has been concerned about the growth in costs over the last several years. The president askced the controller to perform an activity analysis to gain a better insight intor these costs. The result of the activity analysis is summarized as followss Required 1. Classify the activities into prevention, appraisal, internal failure, asternal failure, and not costs of quality (producing praduct), Classify the activities into value-added and non-value added activities Cost of Quality Activity Activity Cost VA/NVA Classification External fadure Non-value-added $16.740 Correcting invoice arrors Disposing of incoming materials with poon Internal failure 13.950 Non-value added quality Internal faure Non valu-added Disposing of scrap 39.060 Non value-added Internal failure 33.480 Expediting late production Value-added Apprainal Final inspection 19.530 Value added Appraisal V Inspecting incoming materials s,SB0 Appraisal Value added Y Inspecting work in process 25,110 valueadded 19.530 Prevention Preventive machine maintenance: Value added Not a quality cost v Producing product 92,070 Non-value ndded External failure v Responding 13.950 to customer quality complaints Total $279.000 Pareto chart for each of the activitieg listed above Angwer the followng s 2. On paper or in a spreadsheet program, prepare What type of chart is a Pareto chart? Bar chart Whith activity appears first, in order from lelt to right? Producing product and net coats of qualt, 1f required, reund revention, anpraisal internal failure, ternal Fai Which activity appears first, in order from laft to right? Producing product 3. Use the activity cost information to determine the percentages of total department costs that are prevention, appraisal, internal failure, external failure, and not costs of quality, If required, round percentages to one decimal place. Quality Cost Percent of Total Classification Activity Cost Department Cost Prevention 19,530 % Appraisal Internal failure Excternal failure Not a cost of quality % Total 4. Determine the parcentages of total department costs that are value-added and non-value-added. If required, round percentages to one decimal place. Percent of Total Department Cost Activity Cost Value added Non-value-added Total opportunity for cost savings. Internal failure costs represent 31 % of the total costs. This means there is significant 5. The department has 42% of its total costs as non-value added External failure v costs represent 11% of the total department costs