As Quality Improves, Savings Can Potentially Be Realized by

question 113

Multiple Choice

As quality improves, savings can potentially be realized by

• A) elimination of prevention costs.
• B) elimination of appraisal costs.
• C) reduced labor costs as a result of less rework and warranty costs.
• D) none of these.

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Definitions:

Total Revenue

The overall income generated by a firm from its sales activity, calculated as the quantity sold multiplied by the selling price.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance premiums.

Variable Costs

Expenses that change in proportion to the activity or production level, such as raw materials, labor costs, and energy usage, in contrast to fixed costs which remain constant regardless of output.

Variable Costs

Costs that vary directly with the level of output or production volume, such as raw materials and labor expenses.