The Following Information Pertains to Molotov, Inc If Quality Costs Were Reduced to 2

Multiple Choice

The following information pertains to Molotov, Inc., for the current year: $\begin{array}{lr}\text { Sales } & \$ 20,000,000 \\\text { Internal failure costs } & 600,000 \\\text { External failure costs } & 400,000 \\\text { Appraisal costs } & 250,000 \\\text { Prevention costs } & 100,000 \\\text { Cost of goods sold } & 10,000,000\end{array}$ If quality costs were reduced to 2.5 percent of sales, profits would increase by

A) $1,000,000.
B) $850,000.
C) $500,000.
D) $250,000.