Indira Runs Quality Control in a Factory That Makes Bikes

question 32

Multiple Choice

Indira runs quality control in a factory that makes bikes. Their defect rate is 10%, which costs the company $3000 per day. She calculates that cutting the defect rate in half would save the company what amount per day?

• A) $150
• B) $300
• C) $1,500
• D) $3,000

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Definitions:

Total Period Costs

All expenses incurred by a business that are not directly tied to the production of goods or services within a specific period.

Cost of Work

The total expense incurred in producing goods or services, including materials, labor, and overhead costs.

Cost of Goods Manufactured

The total cost incurred to manufacture products, including direct labor, direct materials, and manufacturing overhead, during a specific period.

Financial Accounting

The field of accounting focused on the summary, analysis, and reporting of financial transactions pertaining to a business to external entities.