Linda Klein Is the Chief Accountant for Hogan Industries Evaluate the Three Divisions' Programs by First Computing the Costs

question 12

Essay

Linda Klein is the chief accountant for Hogan Industries.The company has three divisions that manufacture wind velocity gauges.The industry is very competitive,and Hogan Industries has lost market share in each of the last four years.Three years ago,management announced a companywide restructuring and the adoption of total quality management.Since that time,each of the divisions has been allowed to chart its own path toward TQM.Klein is new to the company and has asked to see summary figures of the costs of quality for each of the divisions.The following data for the past six months were presented to her:
$\begin{array}{|l|r|r|r|r|}\hline&\text { Clarion County } &\text { Jefferson } &\text { Crawford } \\&\text { Division }&\text { County Division }&\text { County Division }& \text { Company } \\&&&&\text { Totals }\\\hline \text { Sales } & \$2,200,400 &\$2,100,900&\$2,300,100&\$6,601,400 \\\hline \text { Appraisal costs } & \$41,340 & \$20,980 & \$ 44,210&\$ 106,530 \\\hline \text { External failure costs } & 37,980&53,560 &23,450 &114,990 \\\hline \text { Internal failure costs } & 31,100 & 49,780 & 28,450& 109,330\\\hline \text { Prevention costs } & 44,680 & 18,880& 60,120 & 123,680 \\\hline \text { Total costs of quality } & \$155,100 & \$ 143,200 & \$ 156,230 & \$ 454,530 \\\hline\end{array}$

Evaluate the three divisions' programs by first computing the costs of conformance and the costs of nonconformance of each division.Also compute quality costs as a percentage of sales for each division.Identify the division that is developing the strongest quality program.Which division has been slowest to react to the management directive of TQM? Defend your answers.Round percentages to three places beyond the decimal point.

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Definitions:

Stratified Random Sampling

Sampling in which randomly selected units from small or minority populations are forced into the sample to ensure that they are represented in proportion to their presence in the population.

Purposive Sampling

A non-random sampling technique in which the researcher selects participants based on specific characteristics or qualities.

Convenience Sampling

A sampling technique where participants are selected based on their availability or ease of access, rather than at random.

Volunteer Sampling

Obtaining a sample by asking for volunteers.