Figure 14-7 At the beginning of the year, Molybdenum 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:
Refer to Figure 14-7. For the current year, internal failure costs are what percentage of operating costs?

Question

Figure 14-7 At the beginning of the year, Molybdenum 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:
 Refer to Figure 14-7. For the current year, internal failure costs are what percentage of operating costs?

Quizplus · Accepted Answer

To calculate the internal failure costs as a percentage of operating costs for the current year, we need to divide the internal failure costs by the total operating costs and multiply by 100. 
Internal failure costs for the current year = $750,000 
Total operating costs for the current year = $23,000,000 
Internal failure costs as a percentage of operating costs for the current year = ($750,000 / $23,000,000) x 100 = 3.25%. 
Therefore, the answer is B.

Figure 14-7 at the Beginning of the Year, Molybdenum Company