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}{ll}
\text{Total sales}&\$ 1,000,000\
\text{Costs of quality:}&\
\text { Prevention } & 22,500 \
\text { Appraisal } & 47,000 \
\text { Internal failure } & 36,000 \
\text { External failure } & 64,000
\end{array} $
Compute the costs of nonconformance as a percentage of total sales.

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}{ll}
\text{Total sales}&\$ 1,000,000\
\text{Costs of quality:}&\
\text { Prevention } & 22,500 \ 
\text { Appraisal } & 47,000 \ 
\text { Internal failure } & 36,000 \ 
\text { External failure } & 64,000
\end{array} $
 Compute the costs of nonconformance as a percentage of total sales.

Quizplus · Accepted Answer

The costs of nonconformance include both internal and external failure costs, which total $36,000 (internal failure) + $64,000 (external failure) = $100,000. To find this as a percentage of total sales ($1,000,000), divide $100,000 by $1,000,000 and multiply by 100 to get 10%.

Internal Reports on Quality at the Acme Publishing Company Generated