1

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

Redesigning a form to reduce errors	$15,000
Responding to customer complaints	75,000
Verifying the accuracy of a form	30,000
Correcting errors in forms	60,000
Total	$180,000

If sales are $3,000,000, what percentage of total sales are the internal failure costs?

a.1.0%

b.3.0%

c.33.3%

d.2.0%

2.

All of the following enhance the interchange of information in the supply chain except

a.product rework.

b.radio frequency identification devices.

c.enterprise resource planning.

d.electronic data interchange.

3.

Sarasota Company manufactures pillows in the cutting and assembly process. Pillows are manufactured in 40-pillow batch sizes. The cutting time is 4 minutes per pillow. The assembly time is 8 minutes per pillow. It takes 10 minutes to move a batch of pillows from cutting to assembly. Compute the value-added ratio.

a.2.4%

b.54.5%

c.4.5%

d.50%