Question

A quality control activity analysis indicated the following four activity costs of an administrative department:

Answer 1

Answer:

total sales are the internal failure costs is 2%

Explanation:

given data

form to reduce errors =  $15,000

customer complaints = 75,000

Verifying = 30,000

Correcting errors = 60,000

Total = $180,000

sales = $3,000,000

to find out

total sales are the internal failure costs

solution

we know here that internal failture cost is express as

internal failture cost  = correcting error in form   ...........1

internal failture cost  =  $60000

and

internal failture cost as % of total cost is here as

internal failture cost to sale = $\frac{internal\ failture\ cost}{sales}$   .......2

internal failture cost to sale = $\frac{60000}{3000000}$

internal failture cost to sale = 2%

so total sales are the internal failure costs is 2%