At the Beginning of the Year, Grant Company Initiated a Quality

question 6

Multiple Choice

At the beginning of the year, Grant 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:
$\begin{array}{lrr}&\text { Preceding Year }&\text { Current Year }\\\text { Sales } & £ 3,000,000 & £ 3,000,000 \\\text { Quality training } & 3,000 & 4,500 \\\text { Material inspections } & 7,500 & 12,000 \\\text { Scrap } & 60,000 & 45,000 \\\text { Rework } & 120,000 & 75,000 \\\text { Product inspection } & 15,000 & 30,000 \\\text { Product warranty } & 105,000 & 82,500\end{array}$
-Refer to Figure 21-8. For the current year, prevention costs are what percentage of sales?

• A)1.50%
• B)0.65%
• C)0.15%
• D)0.05%

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Definitions:

Annual Average Investment

The mean amount of funds invested over a certain period, typically used to calculate the return on investment over that period.