Cascade Seating Case
Describe the Quality Problems Faced by Cascade
The Executive Director,
Re: Quality Problems Faced by Cascade
- The major problems faced by cascade stem from inadequate supervision and inefficiency of
certain members of staff. The inconsistencies in sizes of seat covers as ordered by GM are as a
result of numerous faults by the production team that consists of cutters and sewers.
Reasons for Scrapping of material % Total Last
year
Cutter cut material incorrectly 28
Cutting machine calibrations off 16
Pattern was incorrect 10
Dull blades on the cutting machine 9
Sewers sewed material incorrectly 25
Sewing machine calibrations off 12
100
Basis of Apportionment (Scrapping) costs
Sewing 31% 17360 8200
Cutting 62% 34720
Administration (Material defects) 7% 3920
56000 8200
Labor Costs
Sewing 139200
Cutting 380160
Administration 145000
Administration ( Staff Training) 4088
Total 668448
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Assumptions
The normal working hours per week is 40
hours
The normal working weeks per year is 48
weeks
- The Quality Issues with Cascades Seating Case Machine calibrations put off 16%
Incorrect material cutting 28% incorrect measurements
Reasons for scrapping materials
Materials sewed incorrectly 25% incorrect measurements
Sewing calibration put off 12%
The major quality issues from GM are the ill fitting cover seats that have been supplied. The root
causes of cascades seating problems are from the cutting department which after cutting the
materials incorrectly due to the lack of application of the calibration machine that is mostly off
and it leads to the incorrect measurements being passed to the sewing department. The wrong
measurements also lead to the switching off of the sewing calibration because the measurements
are not applicable.
- The total cost of material scrapping which amounted to $56,000 dollars is apportioned
relatively between the sewing department and the cutting department 1 . The cutting department
accounts for 62% while the sewing department accounts for 31% of the total scrapping costs
which amounts to $34720 and $17360 respectively. Defective materials are apportioned to the
1 Maher, Lanen and Rahan, Fundamentals of Cost Accounting, 1st Edition, McGraw-Hill, 2005.
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administrative department as they are the ones who ordered the materials and they account for
7% of the $56,000 material scrapping costs which adds up to $3920.
- The performance of the quality department is below average. The lack of coordination
between the production department and the control department led to wrong conclusions that the
performance of the company was improving. The cutting department is leading with excess
wastage as its inconsistencies in material sizes also lead to inefficiencies in the sewing
department. The control department has failed to address the inefficiencies in the cutting
department. It’s not possible for the sewing department to perform positively if the cutting
department is underperforming. The control department has failed in its obligations of
controlling the various departments. - The current cost accounting department system is mostly related to marginal costing where
each unit of labour per hour and the production department’s rates of production are evaluated
and compared to the previous years and the variances analyzed 2 . - The final recommendations should be overhauled the control department and a liaison office
created to link the various departments including the production and the control department. The
staff of the cutting department should be retrained and more supervision directed to the cutting
department as mistakes from the cutting department will also lead to more problems in the
sewing department. The members of staff who are persistently cutting materials incorrectly
should be severely reprimanded and more repeats of such mistakes should lead to dismissals.
2 Horngren, Datar and Foster, Cost Accounting – A Managerial Emphasis, 11th edition, New York: Prentice Hall, 2003.
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Bibliography
Maher, Lanen and Rahan, Fundamentals of Cost Accounting, 1st Edition, McGraw-Hill, 2005.
Horngren, Datar and Foster, Cost Accounting – A Managerial Emphasis, 11th edition, New York:
Prentice Hall, 2003.
