Answer:
Option (a) is correct answer (14 Months)
Explanation:
Given data
Investing in TQM = $2,000,000
Minimum rise in demand = 3.0 %
Last year’s sales = $163,508,343
As per the given data next year sales is increased by 3.0%. So, 3.0% of last year sales
=> 0.03 × $163,508,343 = $4,905,250.29 ~= $4,905,250
Income added to the bottom line = 34.1% of increased demand
=> 0.341 × $4,905,250 = $1,672,690.25~= $1,672,690
Payback on the initial $2,000,000 TQM investment can be attained in a period and can be computed by using the formula
=> (Investment in TQM / Revenue added to the bottom line) × 12
=> ($2,000,000 / $1,672,690) ×12 = 14.34 ~ = 14 Months
