Answer (C) is correct . The costs of prevention and appraisal are conformance costs that serve as financial measures of internal performance. Prevention costs are incurred to prevent defective output. These costs include preventive maintenance, employee training, review of equipment design, and evaluation of suppliers. Appraisal costs are incurred to detect nonconforming output. They embrace such activities as statistical quality control programs, inspection, and testing. The equipment maintenance cost of $1,154 is a prevention cost. The product testing cost of $786 is an appraisal cost. Their sum is $1,940.
Answer (A) is incorrect because The appraisal cost is $786.
Answer (B) is incorrect because The prevention cost is $1,154.
Answer (D) is incorrect because The amount of $2,665 includes rework, an internal failure cost.
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What is Watson’s total prevention and appraisal cost for last month?
