A Company Has Developed a List of Quality-Related Costs as Follows

Essay

A company has developed a list of quality-related costs as follows: $\begin{array}{lrr}& \text { Year 1 } & \text { Year 2 } \\\text { Supplier evaluation } & \$ 0 & \$ 70,000 \\\text { Quality training } & 10,000 & 50,000 \\\text { Inspection of finished product } & 75,000 & 60,000 \\\text { Rework } & 50,000 & 40,000 \\\text { Warranty work } & 120,000 & 80,000 \\\text { Sales } & \$ 2,000,000 & \$ 2,000,000\end{array}$ The company's controller is pleased with the Year 2 results and commented that the company is now on its way toward total quality.Is the controller right? Explain.