4
A1 Company makes electric motors. A1 replaces free of charge any motor that fails within the three-year warranty period. The cost to A1 for this is called the
warranty cost. A1 is trying to reduce all its costs, including production costs and warranty costs.
Production & Warranty
$115
$110
$105
$100
$95
$90
$85
1990 1991
Warranty Costs
Looking at the graph, which part of A1's effort to reduce costs has been least successful?
Select the correct answer.
1988
1989
Production Costs
A. Reducing production costs
B. Reducing overtime
C. Reducing warranty coasts
D. Reducing overhead