In 2013 a Manufacturing Company Instituted a Total Quality Management

question 73

Multiple Choice

In 2013 a manufacturing company instituted a Total Quality Management (TQM) program and one year later produced the report shown below: On the basis of 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.

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Definitions:

Direct Labor Costs

Expenses that are directly tied to the production of goods or services, including wages of workers who can be directly traced to the product.

Indirect Labor Costs

Labor costs associated with employees who do not directly work on the production of products or services, such as maintenance staff or supervisors.

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, maintenance, and factory equipment depreciation.

Work in Process

Inventory of unfinished goods in production, representing materials that have been partially transformed into final products but are not yet complete.