If a Company Spends More on Prevention,what Would Be the Expected

question 34

Multiple Choice

If a company spends more on prevention,what would be the expected impact on other costs of quality?

• A)Appraisal costs will go up.
• B)Failure costs will go down.
• C)Failure costs will go up.
• D)Other costs will be unaffected.

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Definitions:

Income Statement

A financial statement that shows a company's revenue and expenses over a specific period, resulting in a profit or loss.

Par

The face value of a bond or stock, representing the amount the issuer agrees to pay at maturity (for bonds) or the value attributed to a share for accounting purposes.

Market Rate

The prevailing interest rate that is available in the marketplace for loans or investments of a similar risk level and maturity.

Present Value Tables

Tables that provide the factors required to calculate the present value of future cash flows or income.