At the Beginning of the Year, Marinov Corporation Initiated a Quality

question 174

Multiple Choice

At the beginning of the year, Marinov Corporation 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: $\begin{array}{lrr}&\text { Freceding Year }&\text { Current Year }\\\text { Sales } & \$ 2,000,000 & \$ 2,000,000 \\\text { Quality training } & 2,000 & 3,000 \\\text { Packaging inspections } & 5,000 & 8,000 \\\text { Downtime } & 40,000 & 30,000 \\\text { Reinspection } & 80,000 & 50,000 \\\text { Product inspection } & 10,000 & 20,000 \\\text { Product liability } & 70.000 & 55,000\end{array}$ For the current year, appraisal costs are what percentage of sales?

• A)1.40%
• B)1.00%
• C)0.14%
• D)0.40%

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Definitions:

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period, indicating the efficiency of inventory management.

Financial Statements

The comprehensive reports that summarize a company's financial performance, position, and cash flows over a specific period.

Current Ratio

An assessment tool that determines an enterprise's capability to settle short-term due debts by dividing its immediate assets by its immediate liabilities.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time, offering a snapshot of its financial position.