PR27-4 1. PR.27.04B.ALGO eBook 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 result of the activity analysis is summarized as follows: Activities Activity Cost Correcting invoice errors $19,200 Disposing of incoming materials with poor quality 15,360 Disposing of scrap 49,920 Expediting late production 42,240 Final inspection 26,880 Inspecting incoming materials 7,680 Inspecting work in process 38,400 26,880 134,400 23,040 $384,000 Preventive machine maintenance Producing product Responding to customer quality complaints Total The production process is complicated by quality problems, requiring the production manager to expedite production and dispose of scrap. Required: 1. On paper or in a spreadsheet program, prepare a Pareto chart for each of the activities listed above. Answer the following: What type of chart is a Pareto chart? Which activity appears first, in order from left to right? 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. Activity Check My Work Progress: 1/1 items Activity Cost Cost of Quality Classification Value-Added/ Non-Value-Added Classification