CMA Final · Strategic Cost Management · Benchmarking
Sagar Pharma's customer complaint rate is 40 per 10,000 units. The benchmark is 25 per 10,000. Sagar sells 3,00,000 units and each complaint costs ₹1,800 to resolve. If Sagar achieves the benchmark, what is the annual saving?
The annual saving is ₹8,10,000. The excess is 15 complaints per 10,000 units, which is 450 complaints on 3,00,000 units, and at ₹1,800 each the saving equals ₹8,10,000.
- A₹8,10,000Correct
- B₹5,40,000
- C₹13,50,000
- D₹2,70,000
Explanation
Excess complaints = 15 per 10,000. For 3,00,000 units, that is 15 x 30 = 450 complaints. Saving = 450 x 1,800 = ₹8,10,000. ₹13,50,000 wrongly uses the 25 benchmark rate (750 complaints).
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