Maxmo Corporation identified the following costs for the most recent fiscal year: Vendor evaluation = $20,000
Design engineering = $100,000
Scrap = $15,000
Training = $30,000
Warranty = $40,000
What was Maxmo's total prevention cost for the year?
A)$205,000
B)$85,000
C)$55,000
D)$150,000

Question

Quizplus · Accepted Answer

The prevention costs are those costs incurred to prevent defects from occurring in the first place. In this case, the costs of vendor evaluation, design engineering, training, and warranty all fall under prevention costs. The total of these costs is $20,000 + $100,000 + $30,000 + $40,000 = $190,000. Therefore, the correct answer is D) $150,000, which is the total prevention cost.

Maxmo Corporation Identified the Following Costs for the Most Recent