- What Will Be the Total Prevention Cost Appearing on based

question 146

Multiple Choice

$\begin{array}{l}\text { Thais Company's quality cost report is to be based on the following data: }\\\begin{array} { | l | r | } \hline \text { Liability arising from defective products } & \$ 65,000 \\\hline \text { Lost sales due to poor quality } & \$ 61,000 \\\hline \text { Test and inspection of in-process goods } & \$ 57,000 \\\hline \text { Quality circles } & \$ 27,000 \\\hline \text { Net cost of spoilage } & \$ 103,000 \\\hline \text { Debugging software errors } & \$ 39,000 \\\hline \text { Rework labour and overhead } & \$ 105,000 \\\hline \text { Final product testing and inspection } & \$ 42,000 \\\hline \text { Statistical process control activities } & \$ 71,000 \\\hline\end{array}\end{array}$
- What will be the total prevention cost appearing on the quality cost report?

• A) $84,000.
• B) $92,000.
• C) $98,000.
• D) $113,000.

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Definitions:

Interest Cost

Interest cost refers to the total interest that accrues on borrowed funds over the life of a loan or bond, representing the cost of borrowing.

Projected Benefit Obligation

An actuarial measurement of the present value of expected payments for pension benefits owed to employees, based on factors like salary growth and employee turnover.

Accrued/Prepaid Pension Cost

This refers to the accounting treatment of pension expenses that have been incurred but not yet paid (accrued) or paid in advance (prepaid).

Projected Benefit Obligation

An actuarial calculation of the present value of pension benefits owed to employees, measured by the projected salary levels.