The manager of a fabric store has noticed a considerable increase in the amount of defective fabric being scrapped by his store. Clerks notice the defects (such as irregularities in the weave or color of fabric) when they cut yardage from bolts of fabric. These defects usually affect only a small portion of the fabric on a bolt. Therefore, when a clerk discovers a defect, the “bad spot” is cut from the bolt. The clerk fills out a defect slip, which includes the amount of defective fabric (in yards), the retail price per yard, and the inventory control number. The defect slip is attached to the fabric and put in a “defects” bin in the storeroom. Once a month, the assistant manager sends the defect slips to the accounting department and packages the bad fabric for sale as scrap material. The accounting department uses the defect slips to write off the defective inventory in the accounting records. What information could the manager request from the management accounting department that might help in attacking the problem of increasing defects?
The manager of a fabric store has noticed a considerable increase in the amount of defective fabric being scrapped by his store. Clerks notice the defects (such as irregularities in the weave or color of fabric) when they cut yardage from bolts of fabric. These defects usually affect only a small portion of the fabric on a bolt. Therefore, when a clerk discovers a defect, the “bad spot” is cut from the bolt. The clerk fills out a defect slip, which includes the amount of defective fabric (in yards), the retail price per yard, and the inventory control number. The defect slip is attached to the fabric and put in a “defects” bin in the storeroom.
Once a month, the assistant manager sends the defect slips to the accounting department and packages the bad fabric for sale as scrap material. The accounting department uses the defect slips to write off the defective inventory in the accounting records.
What information could the manager request from the
SOLUTION
INCREASING FLAWS MAY RESULT IN A SIGNIFICANT LOSS FOR THE COMPANY. BECAUSE THEY ARE NOW CONSIDERED FAULTS,A NILL VALUE IS ASSIGNED TO THEM . THESE REPORTS AND INFORMATION COULD BE REQUESTED BY A MANAGER IN ORDER TO DETERMINING THE CAUSE OF ESCALATING DEFECTS AND RECEIVE ASSISTANCE IN RESOLVING THE ISSUES DISCUSSED BELOW.
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