Question
At the beginning of the year, Gong Nara Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To
At the beginning of the year, Gong Nara Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
Preceding Year | Current Year | |
Sales | P3,000,000 | P3,000,000 |
Quality training | 3,000 | 4,500 |
Material inspections | 7,500 | 12,000 |
Scrap | 60,000 | 45,000 |
Rework | 120,000 | 75,000 |
Product inspection | 15,000 | 30,000 |
Product warranty | 105,000 | 82,500 |
1. For the current year, prevention costs are what percentage of sales?
0.0005
0.0015
0.0065
0.015
2. For the current year, appraisal costs are what percentage of sales?
0.014
0.004
0.0014
0.01
3. If quality costs had been reduced to 2.5 percent of sales in the current year, profits would have increased by
P91,500
P37,500
P255,000
P174,000
4. For the current year, internal failure costs are what percentage of sales?
0.015
0.029
0.04
0.025
5. For the current year, external failure costs are what percentage of sales?
0.0275
0.025
0.0425
0.015
6. As a result of quality improvements, profits have increased by
P15,000
P97,500
P22,500
P61,500
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started