CMA Final · Strategic Cost Management · Quality Cost Management
Gomti Textiles produces 10,000 metres of fabric daily. Of this, 8% fails inspection; 60% of failures are reworked at Rs. 25 per metre and the rest are sold as seconds, losing Rs. 90 per metre versus normal margin. What is the daily internal failure cost?
Computation gives Rs. 40,800, which is not among the options, so this question is invalid.
- ARs. 51,600Correct
- BRs. 20,000
- CRs. 43,200
- DRs. 72,000
Explanation
Failures = 800 metres. Reworked = 480 x 25 = 12,000. Seconds = 320 x 90 = 28,800. Total = 40,800. Check: 12,000+28,800=40,800, so the option set needs this value.
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