CMA Final · Strategic Cost Management · Quality Cost Management
A firm's quality costs are: prevention Rs. 60,000, appraisal Rs. 90,000, internal failure Rs. 1,20,000, external failure Rs. 2,30,000. Sales are Rs. 40,00,000. What is the total cost of quality as a percentage of sales?
Total quality cost is Rs. 5,00,000, which is 12.5% of sales of Rs. 40,00,000.
- A11.0%Correct
- B7.5%
- C15.0%
- D12.5%
Explanation
Total = 60,000 + 90,000 + 1,20,000 + 2,30,000 = 5,00,000. As percentage of 40,00,000 = 12.5%. So the correct figure is 12.5%, shown in option four; the key given is wrong.
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