Internal Reports on Quality at the Acme Publishing Company Generated

question 8

Multiple Choice

Internal reports on quality at the Acme Publishing Company generated the following information for the Trade Division for the first three months of the year:
$\begin{array}{ll}\text { Total sales }&\$1,000,000\\\text { Costs of quality: }\\\text { Prevention } & 22,500 \\\text { Appraisal } & 47,000 \\\text { Internal failure } & 36,000 \\\text { External failure } & 64.000\end{array}$
Compute the costs of nonconformance as a percentage of total sales.

• A) 12.0%
• B) 5.4%
• C) 1.3%
• D) 10%

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Definitions:

Adjusted Basis

The original cost of a property plus improvements and minus depreciation or damages, used to calculate capital gains or losses.

Fair Market Value

The price at which a property would sell under normal conditions in an open and competitive market.

Recognized Gain

This is the portion of gain realized from the sale or exchange of an asset that is subject to taxation under the IRS code.

Sales Commission

A fee or percentage of a sale amount paid to salespeople, typically as an incentive for sales performance.