Erin Stover Has Been Appointed Chief Accountant for Dancer Industries

question 40

Multiple Choice

Erin Stover has been appointed chief accountant for Dancer Industries.The company has three divisions that manufacture floor tiles.The industry is very competitive,and Dancer Industries has lost market share in each of the last four years.Three years ago,management announced a companywide restructuring and the adoption of total quality management.Since that time,each of the divisions has been allowed to chart its own path toward TQM.Stover is new to the company and has asked to see summary figures of the costs of quality for each of the divisions.The following data were presented to her for the past six months: $\begin{array}{lcccc}&\text { Adams Count } & \text { Armstrong } & \text {Butler County } & \text { Campany } \\ &\text { Division } & \text { Caunty Division } & \text { Division } & \text { Totals } \\\\ \text { Sales}& \underline{\$2,650,000}& \underline{\$1,653,125}& \underline{\$2,150,000}& \underline{\$6,453,125}\\ \text { Appraisal costs } & \$ 52,110 & \$ 27,460 & \$ 42,570 & \$ 122,140 \\\text { External failure costs } & 44,980 & 49,560 & 31,450 & 125,990 \\ \text { Internal failure costs } & 32,100 & 56,780 & 28,450 & 117,330 \\ \text { Prenention costs } & \underline{42,240}& \underline{25,440} & \underline{58,340} & \underline{126,020} \\\text { Total cost of quality } & \underline{ \$ 171.430 }& \underline{ \$ 159,240 }& \underline{\$160,810} & \underline{ \$491,480 }\\\end{array}$


Conformance costs as a percentage of sales for Armstrong County are

• A) 4.66 percent.
• B) 4.97 percent.
• C) 6.43 percent.
• D) 3.20 percent.

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Definitions:

Negative Correlation

A linkage between two variables that shows one increasing while the other decreases.

Coefficient of Alienation

A statistical measure that represents the amount of variation in one variable that is not accounted for by its relationship with another variable.

Positive Slope

An upward trend in a line graph indicating an increase in one variable as another variable increases.

Xy Axis

The two perpendicular lines in a cartesian coordinate system that define the horizontal and vertical dimensions for plotting points in a plane.