CMA Final · Strategic Cost Management · Quality Cost Management
Ananya Foods has sales of Rs. 50,00,000. Quality costs are prevention Rs. 1,00,000, appraisal Rs. 1,50,000, internal failure Rs. 2,00,000 and external failure Rs. 3,00,000. What percentage of sales is the total cost of quality?
Total cost of quality is Rs. 7,50,000, which is 15% of sales of Rs. 50,00,000. All four categories must be included. Listed option 13.0% is therefore incorrect for this data.
- A13.0%Correct
- B7.0%
- C5.0%
- D15.0%
Explanation
Total COQ = 1,00,000 + 1,50,000 + 2,00,000 + 3,00,000 = Rs. 7,50,000. As a percentage of Rs. 50,00,000 this is 15.0%. The 13.0% omits prevention. 7.0% is not derived from the data.
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