At the beginning of the year, Lombardi Company initiated an environmental cost reduction program. To help assess the impact of the environmental cost reduction improvement program, the following data was collected for the current and preceding year: For the current year, external failure costs are what percentage of operating costs?

Question

At the beginning of the year, Lombardi Company initiated an environmental cost reduction program. To help assess the impact of the environmental cost reduction improvement program, the following data was collected for the current and preceding year:  For the current year, external failure costs are what percentage of operating costs?

Quizplus · Accepted Answer

To calculate the external failure costs as a percentage of operating costs, we need to divide the external failure costs ($12,500) by the operating costs ($680,000) and multiply by 100.

($12,500 ÷ $680,000) × 100 = 1.838%

Therefore, the external failure costs for the current year are 1.83% of the operating costs. The best choice is B.

At the Beginning of the Year, Lombardi Company Initiated an Environmental