At the beginning of the year, Grant Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years: For the current year, prevention costs are what percentage of sales?

A) 1.50%
B) 0.65%
C) 0.15%
D) 0.05%

Question

At the beginning of the year, Grant Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years: For the current year, prevention costs are what percentage of sales?
At the beginning of the year, Grant Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years: For the current year, prevention costs are what percentage of sales? A) 1.50% B) 0.65% C) 0.15% D) 0.05%

A) 1.50% 
B) 0.65% 
C) 0.15% 
D) 0.05%

Quizplus · Accepted Answer

Prevention costs for current year = $350,000
Sales for current year = $230,000,000
Prevention cost percentage = (Prevention costs/Sales) x 100
Prevention cost percentage = (350,000/230,000,000) x 100 = 0.1522% = 0.15% (rounded to two decimal places) Therefore, the answer is C) 0.15%.

At the Beginning of the Year, Grant Company Initiated a Quality