Answer the question below based on the following scenario:

A company has $1,000,000 in annual sales and the owner pays himself 100% of profits. The cost-of-goods-sold is $900,000. The company manufactures 9,000 units each year. The present defect rate is about 3%. Assume that the price/unit is based on this information and is equal in each of the scenarios.

Also, 1) the cost/unit is calculated by dividing the number of saleable units by the total cost of goods sold and, 2) the price is assumed to remain at the same rate as the units are being sold at in the current situation.

Complete the blank cells and answer the question.

	Current Situation	Alternative Situation #1	Alternative Situation #2
# of Units Produced	9,000		9,000
# of Saleable Units	8,730		8,910
Total Sales	$1,000,000	$1,199,921	$1,020,551
Total Production Cost of Goods Sold	$900,000	$1,080,000	$900,000
Price/Unit	$114.54	$114.54	$114.54
Cost per Unit	$103.09	103.09	$100
Defect Rate	3%	3%	1%
Unsaleable Units	270	324
Net Profit	$100,000

Question: Which of the following is NOT a likely consequence of a strategy to increase quality?

		Increased customer loyalty
		Increased sales as a result of the perception of higher quality
		Decreased costs through less re-work and fewer returns
		Decreased worker pride and satisfaction