Figure 21-7
at the Beginning of the Year, Andrew Company

question 24

Multiple Choice

Figure 21-7
At the beginning of the year, Andrew 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: $\begin{array}{lrr}&\text { Freceding Year } & \text { Current Year } \\\text { Sales } & £ 2,400,000 & £ 2,400,000 \\\text { Quality training } & 30,000 & 48,000 \\\text { Material inspections } & 7,000 & 8,000 \\\text { Scrap } & 48,000 & 30,000 \\\text { Rework } & 60,000 & 48,000 \\\text { Product inspection } & 10,000 & 12,000 \\\text { Product warranty } & 36,000 & 24,000\end{array}$
-Refer to Figure 21-7. For the current year, prevention costs are what percentage of sales?

• A)9.00%
• B)8.25%
• C)7.00%
• D)2.00%

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Definitions:

Summarized Financial Data

Concise representation of a company's financial performance and position, aggregating essential financial information.

Gains and Losses

The increase (gains) or decrease (losses) in equity resulting from business activities and transactions not related directly to the primary operations of the company.

Income Statement

A report detailing a company's financial activities, including income, expenditures, and net earnings for a particular period.

Income from Operations

The earnings of a company from its core business operations, excluding income from other sources and expenses like taxes.