The following information pertains to Molotov, Inc., for the current year: $$\begin{array} { l r }
\text { Sales } & \$ 20,000,000 \
\text { Internal failure costs } & 600,000 \
\text { External failure costs } & 400,000 \
\text { Appraisal costs } & 250,000 \
\text { Prevention costs } & 100,000 \
\text { Cost of goods sold } & 10,000,000
\end{array}$$ Quality costs are what percentage of sales?
A)3.00%
B)5.00%
C)6.25%
D)6.75%

Question

The following information pertains to Molotov, Inc., for the current year: $$\begin{array} { l r } 
\text { Sales } & \$ 20,000,000 \
\text { Internal failure costs } & 600,000 \
\text { External failure costs } & 400,000 \
\text { Appraisal costs } & 250,000 \
\text { Prevention costs } & 100,000 \
\text { Cost of goods sold } & 10,000,000
\end{array}$$ Quality costs are what percentage of sales?
A)3.00%
B)5.00%
C)6.25%
D)6.75%

Quizplus · Accepted Answer

Quality costs include internal failure costs, external failure costs, appraisal costs, and prevention costs, totaling \$1,350,000 (\$600,000 + \$400,000 + \$250,000 + \$100,000). The percentage of sales is calculated as (\$1,350,000 / \$20,000,000) * 100 = 6.75%.

The Following Information Pertains to Molotov, Inc Quality Costs Are What Percentage of Sales? A)3

The Following Information Pertains to Molotov, Inc Quality Costs Are What Percentage of Sales?
A)3