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Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
ISBN: 9781285866307

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BuyFindarrow_forward

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
ISBN: 9781285866307
Textbook Problem

Pareto chart

Silicon Solutions Inc. manufactures RAM memory chips for personal computers. An activity analysis was conducted, and the following activity costs were identified with the manufacture and sale of memory chips:

Activities Activity Cost
Correct shipment errors $ 144,000
Disposing of scrap 90,000
Emergency equipment maintenance 99,000
Employee training 36,000
Final inspection 81,000
Inspecting incoming materials 54,000
Preventive equipment maintenance 27,000
Processing customer returns 90,000
Scrap reporting 36,000
Supplier development 9,000
Warranty claims 234,000
Total $900,000

Prepare a Pareto chart of these activities.

To determine

Pareto Chart: Pareto Chart is a combination of line and bar graph shown together. It represents the totals of the attributes and their categories. So it shows the categories left to right with the largest total attribute on the left.

To Prepare: A Pareto Chart for the given information.

Explanation

Prepare the Pareto Chart for the given data.

Activities Activity Cost
Warranty Claims $234,000
Correct shipment errors $144,000
Emergency Equipment maintenance $99,000
Disposing Scrap $90,000
Processing Customer Returns $90,000
Final Inspe...

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