The Following Represents the Financial Information of Fabriz Corporation, a Manufacturer

question 8

Essay

The following represents the financial information of Fabriz Corporation, a manufacturer of electronic components, for two months:
$$\begin{array} { l r r } & \text { March } & { \text { April } } \\\text { Sales } & \$ 539,000 & \$ 495,000 \\\text { Costs: } & & \\\text { Process inspection } & 3,300 & 3,760 \\\text { Scrap } & 3,700 & 3,860 \\\text { Quality training } & 37,600 & 26,000 \\\text { Warranty repairs } & 8,600 & 9,600 \\\text { Testing equipment } & 14,000 & 14,000 \\\text { Custorner complaints } & 5,600 & 6,800 \\\text { Rework } & 34,000 & 37,000 \\\text { Preventive maintenance } & 27,000 & 19,000 \\\text { Materials inspection } & 13,000 & 9,600 \\\text { Field testirg } & 18,800 & 24,800\end{array}$$
Required:
a. Classify these items into prevention, appraisal, internal failure, or external failure costs.
b. Calculate the ratio of the prevention, appraisal, internal failure, and external failure costs to sales for March and April.

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Definitions:

Balance Sheet

A financial statement showing a company's assets, liabilities, and shareholders' equity at a specific point in time.

Income Statement

A financial report that shows a company's revenue, expenses, and profits over a specific period of time.

Profit Margin

A financial metric used to assess a company's profitability by dividing net income by revenue.

Net Income

is the amount of money that remains after all expenses, taxes, and costs have been subtracted from a company's total revenue, also known as the bottom line.