Figure 14-2 At the beginning of the year, Andrew 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:

-Refer to Figure 14-2.For the current year, internal failure costs are what percentage of sales?

Question

Figure 14-2 At the beginning of the year, Andrew 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:
 
-Refer to Figure 14-2.For the current year, internal failure costs are what percentage of sales?

Quizplus · Accepted Answer

To calculate the percentage of internal failure costs to sales for the current year, we need to divide the internal failure costs by sales and multiply by 100. 
Internal failure costs for the current year = $260,000 
Sales for the current year = $8,000,000 
Percentage of internal failure costs to sales for the current year = (260,000/8,000,000) x 100 = 3.25% 
Therefore, the correct answer is B.

Figure 14-2 at the Beginning of the Year, Andrew Company