In 2020, a manufacturing company instituted a total quality management (TQM) program producingthe comparative report shown below:[LO 17-5]Summary COQ Report(in thousands)2019 2020 % ChangePrevention costs $ 200 $ 300 +50Appraisal costs 210 315 +50Internal failure costs 190 114 −40External failure costs 1,200 621 −48Total COQ $1,800 $1,350 −25On the basis of this report, which one of the following statements is most likely correct?a. An increase in conformance costs resulted in a higher-quality product and, therefore, a decreasein nonconformance costs.b. An increase in inspection costs was solely responsible for the decrease in quality costs.c. Quality costs such as scrap and rework decreased by 48%.d. Quality costs such as returns and repairs under warranty decreased by 40%.e. Nonconformance costs increased by 50% and conformance costs decreased by approximately 47%.
In 2020, a manufacturing company instituted a total
the comparative report shown below:
[LO 17-5]
Summary COQ Report
(in thousands)
2019 2020 % 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 COQ $1,800 $1,350 −25
On the basis of this report, which one of the following statements is most likely correct?
a. An increase in conformance costs resulted in a higher-quality product and, therefore, a decrease
in nonconformance costs.
b. An increase in inspection costs was solely responsible for the decrease in quality costs.
c. Quality costs such as scrap and rework decreased by 48%.
d. Quality costs such as returns and repairs under warranty decreased by 40%.
e. Nonconformance costs increased by 50% and conformance costs decreased by approximately 47%.
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