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 asked the controller to perform an activity analysis to gain a better insight into these costs. The activity analysis revealed the following. The production process is complicated by quality problems, requiring the production manager to expedite production and dispose of scrap. Required: 1. 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. Activity Activity Cost Cost of Quality Classification VA/NVA Correcting invoice errors $7,500 External failure Non-value-added Disposing of incoming materials with poor quality 15,000 Internal failure Non-value-added Disposing of scrap 27,500 Internal failure Non-value-added Expediting late production 22,500 Internal failure Non-value-added Final inspection 20,000 Appraisal Value-added Inspecting incoming materials Inspecting work in process Preventive machine maintenance Producing product 5,000 Appraisal Value-added 25,000 Appraisal Value-added 15,000 Prevention Value-added - 97,500 Not a quality cost Value-added Previous