The following information pertains to Longhorn Company for the current year: $$\begin{array} { l r }
\text { Sales } & \$ 1,000,000 \
\text { Internal failure costs } & 125,000 \
\text { External failure costs } & 50,000 \
\text { Appraisal costs } & 35,000 \
\text { Prevention costs } & 25,000 \
\text { Cost of goods sold } & 375,000
\end{array}$$ Quality costs are what percentage of sales?
A)2.5%
B)6.0%
C)15.0%
D)23.5%

Question

The following information pertains to Longhorn Company for the current year: $$\begin{array} { l r } 
\text { Sales } & \$ 1,000,000 \
\text { Internal failure costs } & 125,000 \
\text { External failure costs } & 50,000 \
\text { Appraisal costs } & 35,000 \
\text { Prevention costs } & 25,000 \
\text { Cost of goods sold } & 375,000
\end{array}$$ Quality costs are what percentage of sales?
A)2.5%
B)6.0%
C)15.0%
D)23.5%

Quizplus · Accepted Answer

Quality costs include internal failure costs, external failure costs, appraisal costs, and prevention costs, totaling $235,000 ($125,000 + $50,000 + $35,000 + $25,000). The percentage of sales is $235,000 / $1,000,000 = 23.5%.

The Following Information Pertains to Longhorn Company for the Current