In 2019 a Manufacturing Company Instituted a Total Quality Management

question 24

Multiple Choice

In 2019 a manufacturing company instituted a Total Quality Management (TQM) program and one year later produced the report shown below:
Summary of Cost of Quality (COQ) Report
(in thousands)
$\begin{array}{lrrrc} & 2019 & 2020 & \% \text { Change } \\\text { Prevention costs } & \$ 200 & \$ 300 & +50 \\\text { Appraisal costs } & 210 & 315 & +50 \\\text { Internal failure costs } & 190 & 114 & -40 \\\text { External failure costs } & 1.200 & 621 & -48\\\text { Total COQ }&\$1,800&\$1,350&-25\end{array}$ Based on the above 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, resulted in a decrease in non-conformance costs.
• B) An increase in inspection costs was solely responsible for the decrease in total quality costs.
• C) Quality costs such as scrap and rework decreased by 48 percent.
• D) Quality costs such as returns and repairs under warranty decreased by 40 percent.
• E) Non-conformance costs increased by 50 percent and conformance costs decreased by approximately 47 percent.

---

Definitions:

H. Floresiensis

A species of small hominin that lived on the island of Flores, Indonesia, known for its remarkably small stature and brain size.

"Hobbits"

A nickname for Homo floresiensis, a small-bodied ancient human species discovered on the Indonesian island of Flores.

Foramen Magnum

A large opening in the base of the skull through which the spinal cord passes to connect to the brain.

Spinal Cord

In vertebrates, the dorsal, tubular nerve cord.