Scranton Extruded Plastics Is a Company Involved in the Injection

question 3

Essay

Scranton Extruded Plastics is a company involved in the injection molding process of plastic extruders. The company had a process of inspection, checking line work, and handling returns from customers to identify and correct quality problems. Scrapped extruders are ground into powder and fed back to the extruders as raw material; thus, all scrapped extruders are reused at some point. The company's cost accounting system indicates that the cost of scrap is "zero," a view also held by Scranton's management. (Source: "Activity Based management" by Peter B. B. Turney published in Management Accounting)
Required:
a) Comment on the view that scrap costs is zero at Scranton Extruded Plastics.
b) Identify internal and external failure activities that were required by Scranton.
c) Identify prevention and appraisal activities that could have been employed.

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Definitions:

Total Assets

The sum of all assets owned by a company, including cash, inventory, property, and equipment.

Operating Cash

Cash generated from a company's normal business operations.

Investing Activities

Financial transactions involving the acquisition or disposal of long-term assets or other investments not included in cash equivalents.

Financing Activities

Transactions involving raising funds for the company through borrowing or issuing equity.