If Management Is Reviewing a Multiple-Period Trend Graph That Shows

question 84

Multiple Choice

If management is reviewing a multiple-period trend graph that shows individual quality cost categories,what might they expect to see?

• A)overall quality costs decreasing as a percentage of sales,with prevention costs,as a category,increasing over time
• B)overall quality costs decreasing as a percentage of sales,with all categories decreasing over time
• C)overall quality costs increasing as a percentage of sales,with external failure costs decreasing and prevention costs increasing
• D)overall quality costs remaining the same as a percentage of sales,with prevention and appraisal costs increasing over time

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Definitions:

Investment Turnover

A ratio that measures how effectively a company uses its invested capital to generate sales revenue.

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated as a percentage of the investment's profit to its cost.

Support Department Cost

Support department cost refers to the expenses associated with departments that provide essential services or support to production departments but do not directly engage in the production process.

Investment Turnover

A measure of a company's efficiency in using its assets to generate sales or revenue; the ratio of net sales to average invested assets.