The Farber Company Recorded the Following Costs of Quality During

question 114

Multiple Choice

The Farber Company recorded the following costs of quality during the current period: $$\begin{array} { | l | r | } \hline \text { Downtime } & \$ 1,500 \\\hline \text { Inspection } & 1,000 \\\hline \text { Product design } & 4,000 \\\hline \text { Reliability testing upon completion of production } & 2,500 \\\hline \text { Restocking and packaging } & 1,500 \\\hline \text { Training } & 3,000 \\\hline \text { Warranty repairs and replacements } & 2,500 \\\hline \text { Total Costs of Quality } & \$ 16,000 \\\hline & \\\hline\end{array}$$ Which choice below represents the correct amount of prevention and appraisal costs? $$\begin{array} { | c | c | c | } \hline & \text { Prevention } & \text { Appraisal } \\\hline \text { A) } & \$ 4,000 & \$ 1,000 \\\hline \text { B) } & \$ 3,000 & \$ 1,000 \\\hline \text { C) } & \$ 7,000 & \$ 3,500 \\\hline \text { D) } & \$ 3,000 & \$ 2,500 \\\hline\end{array}$$

• A) Choice A
• B) Choice B
• C) Choice C
• D) Choice D

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Definitions:

Fixed Assets

Long-term tangible assets, such as buildings, machinery, and equipment, used in the operation of a business and not expected to be consumed or converted into cash in the short term.

Profit Center Income Statement

A financial report that details the revenues, costs, and profits of a distinct unit within a company, focusing on its financial performance.

Controllable Revenues

Revenues earned by a profit center.

Return On Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the profit gained from an investment by the cost of the investment.