At the Beginning of the Year, Jim Jackson Initiated a Quality

question 105

Multiple Choice

At the beginning of the year, Jim Jackson 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:
$\begin{array}{lrr}&\underline{\text { Preceding Year }} &\underline{\text { Current Year}}\\\text { Sales } & \$ 2,400,000 & \$ 2,000,000 \\\text { Scrap } & 40,000 & 30,000 \\\text { Rework } & 100,000 & 70,000 \\\text { Product inspection } & 12,000 & 18,000 \\\text { Quality training } & 4,000 & 5,000 \\\text { Material inspections } & 8,000 & 13,000 \\\text { Product warranty } & 80,000 & 50,000\end{array}$

-Refer to the figure.For the current year,what percentage of sales are internal failure costs?

• A)2.50%
• B)5.00%
• C)7.50%
• D)9.30%

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion of a set of values.

Interquartile Range

The difference between the third quartile (75th percentile) and the first quartile (25th percentile), a measure of variability that indicates the spread of the middle 50% of a dataset.

Coefficient Of Variation

A standardized measure of dispersion of a probability distribution or frequency distribution, calculated as the ratio of the standard deviation to the mean, expressed as a percentage.

Range

The difference between the highest and lowest values in a dataset.