In Year 2, a manufacturing company instituted a Total Quality Management (TQM) program producing the report shown below: | Summary Cost of Quality Report
(in thousands)
|
|---|
| Year 1
| Year 2
| % Change
|
|---|
Prevention costs | $ 200 | $ 300 | +50 | Appraisal costs | 210 | 315 | +50 | Internal failure costs | 190 | 114 | −40 | External failure costs | 1,200 | 621 | −48 | Total quality costs | $ 1,800 | $ 1,350 | −25 |
On the basis of this report, which one of the following statements is most likely correct?
|
a. | Quality costs such as scrap and rework decreased by 48 percent. | |
b. | An increase in inspection costs was solely responsible for the decrease in quality costs. | |
c. | Quality costs such as returns and repairs under warranty decreased by 40 percent. | |
d. | An increase in conformance costs resulted in a higher quality product, and therefore, resulted in a decrease in non-conformance costs. |
|
