At the Beginning of the Year, Mike Gioulis Initiated a Quality

question 102

Multiple Choice

At the beginning of the year, Mike Gioulis 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: $\begin{array}{lrr}&\text { Freceding Year }&\text { Current Year }\\\text { Sales } & \$ 2,400,000 & \$ 2,000,000 \\\text { Scrap } & 40,000 & 30,000 \\\text { Rework } & 100,000 & 70,000 \\\text { Product inspection } & 12,000 & 18,000 \\\text { Quality training } & 4,000 & 5,000 \\\text { Material inspections } & 8,000 & 13,000\end{array}$ For the current year, prevention costs are what percentage of sales?

• A)2.50%
• B)9.30%
• C)0.25%
• D)1.80%

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Definitions:

Cash Collected

The total amount of cash received by a business or organization from its various activities, including sales, investments, and financing.

Ending Inventory

The total value of goods available for sale at the end of an accounting period.

August

The month that falls eighth in the sequence of the Gregorian calendar year.

Total Cost

The complete cost of producing or acquiring goods, including variable and fixed costs.