ACCA Applied Knowledge · Management Accounting · Performance measurement - overview
Kestrel Ltd assembles tablets. Last month 20,000 units were started and 19,000 were completed and passed final inspection. Of the units that passed inspection, 950 were returned by customers within the month as faulty. What was the customer return rate as a percentage of units that passed inspection?
The customer return rate is 5.0 percent, found by dividing the 950 returned units by the 19,000 units that passed inspection. Dividing by the 20,000 units started would use the wrong base and understate the rate.
- A5.0%Correct
- B4.75%
- C5.26%
- D4.5%
Explanation
Return rate = 950 / 19,000 = 5.0%. The 4.75% option wrongly divides by 20,000 units started. The 5.26% option divides 1,000 by 19,000 (using the inspection failures), and 4.5% is an arbitrary miscalculation.
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