Consider the following data for Sue Company:
Compute the following quality ratios for Sue Company:
a.Total costs of quality as a percentage of sales
b.Ratio of costs of conformance to total costs of quality
c.Ratio of costs of nonconformance to total costs of quality
d.Costs of nonconformance as a percentage of sales
Preliminary calculations:
Cost of conformance: $800 + $1,000 = $1,800
Cost of nonconformance: $400 + $600 = 1,000
Total costs of quality $2,800
Definitions:
Midpoint Method
A technique used to calculate elasticity by averaging the two points on a demand or supply curve and considering the percentage change from the average.
Price Elasticity
A measure of the sensitivity of demand for a product or service to a change in its price.
Elasticity of Demand
An evaluation of how sensitively the demanded amount of a product responds to changes in price.
Demand Curve
An illustration that depicts the connection between how much of a product consumers want to buy and its cost.
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