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: $\begin{array}{lr}
\text { Total sales } & \$ 1,000,000 \
\text { Costs of quality: } & \
\text { Prevention } & 50,000 \
\text { Appraisal } & 47,000 \
\text { Internal failure } & 36,000 \
\text { External failure } & 64,000
\end{array}$
Compute the ratio of costs of nonconformance to total costs of quality.

Question

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: $\begin{array}{lr}
\text { Total sales } & \$ 1,000,000 \
\text { Costs of quality: } & \
\text { Prevention } & 50,000 \
\text { Appraisal } & 47,000 \
\text { Internal failure } & 36,000 \
\text { External failure } & 64,000
\end{array}$ 
Compute the ratio of costs of nonconformance to total costs of quality.

Quizplus · Accepted Answer

The costs of nonconformance for the Trade Division for the first three months of the year is:$2700+$4500+$3000=$10200

The total costs of quality for the Trade Division for the first three months of the year is:$4000+$7000+$5000+$10200=$26200

The ratio of costs of nonconformance to total costs of quality is:$10200/$26200=0.508 or 50.8%. Therefore, the answer is B.

Internal Reports on Quality at the Acme Publishing Company Generated