Question 1

In a lean accounting system, costs are assigned to products by:

Accepted Answer

A) Tracing costs to product value streams as much as possible. 
B) Allocating common costs to various individual products. 
C) Directly tracing costs to a single product as much as possible. 
D) Assigning the appropriate standard costs to individual value streams. 
A) Tracing costs to product value streams as much as possible. 
B) Allocating common costs to various individual products. 
C) Directly tracing costs to a single product as much as possible. 
D) Assigning the appropriate standard costs to individual value streams.

Question 2

Turbo-Oven, Inc. is considering a move to cellular manufacturing. Management of the company has requested from you, as the management accountant, to supply it with information that will help inform the decision as to whether or not such a move is desirable. Your research into past performance of the company as well as extensive discussion with the manager of operations and the sales manager produced the following information.
   Required:
1. In terms of the above information, provide for management of the company a rationale as to why you included each of the following items:
a. increase in total sales revenue
b. decrease in direct materials cost as a percentage of sales
c. decrease in holdings of Work-in-Process (WIP) inventory
2. Provide an estimate of each of the following financial effects associated with the proposed move to a cellular manufacturing layout:
a. change in total (out-of-pocket) manufacturing costs
b. reduction in WIP inventory holdings
c. net financial effect of the change, per year
3. In general, what types of costs would need to be incurred in order to reap the benefits outlined above in Requirement 2?

Accepted Answer

Answer may vary
Feedback:
1a. Under a ce

Question 3

A common characteristic among control charts, histograms, Pareto diagrams, and cause-and-effect diagrams is that they are:

Accepted Answer

A) Based on relevant cost and relevant revenue data. 
B) Based on the same scale. 
C) Visual representations of quality-related problems. 
D) Statistically-based. 
E) All useful tools for preventing quality problems from occurring. 
A) Based on relevant cost and relevant revenue data. 
B) Based on the same scale. 
C) Visual representations of quality-related problems. 
D) Statistically-based. 
E) All useful tools for preventing quality problems from occurring.

Question 4

A graphical representation of frequency of occurrence of the factors contributing to an indicated quality problem, ordered from the most to the least frequent, is a(n):

Accepted Answer

A) Control chart. 
B) Pareto diagram. 
C) Histogram. 
D) Ishikawa diagram. 
E) Cause-and-effect diagram. 
A) Control chart. 
B) Pareto diagram. 
C) Histogram. 
D) Ishikawa diagram. 
E) Cause-and-effect diagram.

Question 5

A Cost-of-Quality (COQ) reporting format may be applicable to help support the sustainability goals of organizations. Indeed, the development of such a reporting framework would likely be viewed as a significant improvement to an organization's management accounting and control system.
Required:
1. Use your knowledge of COQ reporting to speculate on an "environmental assessment" reporting framework. This tool should identify each aspect of the organization's activities that affect the environment, in terms of both living and non-living natural systems (ecosystems), including land, water, and air. (That is, what are some of the environmental impacts that the management accounting system could assess and monitor?)
2. In the past, management accountants focused on a traditional approach to environmental risk management, wherein the focus was on ensuring regulatory compliance (EPA, etc.) in order to minimize fines, penalties, and legal costs). In today's business climate, however, more will likely be expected of the management accountant. What type of opportunities, associated with environmental performance, might the management accountant suggest to management?

Accepted Answer

Answer may vary
Feedback: No set solutio

Question 6

The term performance quality refers to:

Accepted Answer

A) The difference between customer expectations (for attributes, services, functionality, etc.) and product design. 
B) The gap between product design specifications and actual performance of the product. 
C) Customer satisfaction with the total experience of a product or service. 
D) The gap between actual performance of a product and customer expectations. 
E) Costs related to meeting customer demands and quality-related expectations. 
A) The difference between customer expectations (for attributes, services, functionality, etc.) and product design. 
B) The gap between product design specifications and actual performance of the product. 
C) Customer satisfaction with the total experience of a product or service. 
D) The gap between actual performance of a product and customer expectations. 
E) Costs related to meeting customer demands and quality-related expectations.

Question 7

Which of the following items is not a tool that can be used by management to detect poor quality in an operation?

Accepted Answer

A) Control chart. 
B) Run chart. 
C) Taguchi loss function. 
D) Statistical quality control (SQ
C)  chart. 
E) Statistical process control (SP
C)  chart. 
A) Control chart. 
B) Run chart. 
C) Taguchi loss function. 
D) Statistical quality control (SQ
C)  chart. 
E) Statistical process control (SP
C)  chart.

Question 8

Which of the following is not a characteristic of the general framework for managing and controlling quality depicted in Chapter 17?

Accepted Answer

A) Customer expectations. 
B) Taguchi loss functions. 
C) Six sigma quality expectations. 
D) Diagnostic control system. 
E) Standard cost variance analysis, based on flexible budgets. 
A) Customer expectations. 
B) Taguchi loss functions. 
C) Six sigma quality expectations. 
D) Diagnostic control system. 
E) Standard cost variance analysis, based on flexible budgets.

Question 9

A proper role for accounting in terms of managing and controlling quality is all of the following except:

Accepted Answer

A) Providing management with relevant financial information for decisions related to quality-oriented initiatives. 
B) Providing management with relevant nonfinancial information for decisions related to quality-related initiatives. 
C) Specifying quality-related goals and objectives for the organization. 
D) Identifying operational constraints. 
E) Participating in the development of Six Sigma quality-related goals. 
A) Providing management with relevant financial information for decisions related to quality-oriented initiatives. 
B) Providing management with relevant nonfinancial information for decisions related to quality-related initiatives. 
C) Specifying quality-related goals and objectives for the organization. 
D) Identifying operational constraints. 
E) Participating in the development of Six Sigma quality-related goals.

Question 10

Steel Inc. specializes in manufacturing ship doors. The blueprint specification for the thickness of a high-demand model calls for 0.9 ± 0.005 inch. It costs $800 to scrap a part that is outside of the specification. The thickness measure for the unit just completed is 0.85.
Required:
1. Calculate the value of k, the cost coefficient in the Taguchi loss function.
2. Calculate the estimated amount of loss for the unit, L(x) = 0.85.

Accepted Answer

Answer may vary
Feedback:
1. k = Total q

Question 11

Which of the following statements about product quality is not true?

Accepted Answer

A) In almost all cases detecting and fixing quality problems before delivering to customers are far less expensive than dealing with quality failures in the field after delivery has been made to the customers. 
B) In general, designing quality into products is far less expensive than trying to detect quality problems during production. 
C) Quality failure costs should include the possible opportunity cost of lost future sales. 
D) The most expensive cost to the firm for a quality failure in the field is the cost of emergency service to fix the problem or to replace the product. 
E) The cost of fixing quality problems after delivery to the customer is likely to exceed both the cost of designing quality into the product and the cost of detecting quality defects during production. 
A) In almost all cases detecting and fixing quality problems before delivering to customers are far less expensive than dealing with quality failures in the field after delivery has been made to the customers. 
B) In general, designing quality into products is far less expensive than trying to detect quality problems during production. 
C) Quality failure costs should include the possible opportunity cost of lost future sales. 
D) The most expensive cost to the firm for a quality failure in the field is the cost of emergency service to fix the problem or to replace the product. 
E) The cost of fixing quality problems after delivery to the customer is likely to exceed both the cost of designing quality into the product and the cost of detecting quality defects during production.

Question 12

For Cost of Quality (COQ) reporting purposes, materials inspection costs would be classified as:

Accepted Answer

A) Prevention costs. 
B) Retention costs. 
C) Appraisal costs. 
D) Internal failure costs. 
E) External failure costs. 
A) Prevention costs. 
B) Retention costs. 
C) Appraisal costs. 
D) Internal failure costs. 
E) External failure costs.

Question 13

Which of the following is not an external nonfinancial measure of quality?

Accepted Answer

A) Number of defective parts produced. 
B) Number of defective units shipped to customers. 
C) Number of customer complaints. 
D) Delivery delays (e.g., difference between scheduled and actual delivery date). 
E) Percentage of products that experience early or excessive failure. 
A) Number of defective parts produced. 
B) Number of defective units shipped to customers. 
C) Number of customer complaints. 
D) Delivery delays (e.g., difference between scheduled and actual delivery date). 
E) Percentage of products that experience early or excessive failure.

Question 14

Quality costs for services include:

Accepted Answer

A) Prevention costs and appraisal costs only. 
B) Prevention costs, appraisal costs and internal failure costs only. 
C) Appraisal costs and internal failure costs only. 
D) Prevention costs, appraisal costs, internal failure costs, and external failure costs. 
E) External failure costs only. 
A) Prevention costs and appraisal costs only. 
B) Prevention costs, appraisal costs and internal failure costs only. 
C) Appraisal costs and internal failure costs only. 
D) Prevention costs, appraisal costs, internal failure costs, and external failure costs. 
E) External failure costs only.

Question 15

The Hormosa Company classifies its overall Cost of Quality (COQ) into four categories. COQ components, as a percentage of cost of goods sold for the last three years, are as follows:
   Required:
1. Prepare a histogram that shows the COQ trends for each of the four components of COQ as well as total COQ over the period 2011 through 2013. Note: Index numbers (1) through (4) may be used in place of a description key. For example, in labeling your histogram you can use "1" to refer to "Prevention Costs," etc.
2. Of what interpretive or managerial value is the histogram you prepared, both in a general sense and as it relates to the data set at hand?

Accepted Answer

Answer may vary
Feedback:
1. @#IMG-DLM& Key to cha

Question 16

Which of the following statements regarding the meaning of "quality" is true?

Accepted Answer

A) Total quality can be decomposed into two broad components: features and performance. 
B) "Features," as used in the discussion of quality, refers to actual functionality of a product. 
C) Another name for product features is performance quality. 
D) Cost-of-Quality (COQ) reporting is most helpful in managing design quality. 
E) Quality of design is defined as the difference between design specifications and customer desires. 
A) Total quality can be decomposed into two broad components: features and performance. 
B) "Features," as used in the discussion of quality, refers to actual functionality of a product. 
C) Another name for product features is performance quality. 
D) Cost-of-Quality (COQ) reporting is most helpful in managing design quality. 
E) Quality of design is defined as the difference between design specifications and customer desires.

Question 17

A ______________ shows trends in a quality measure over time.

Accepted Answer

A) Pareto diagram 
B) Fishbone (i.e., Ishikawa) diagram 
C) Cost-of-Quality (COQ) report 
D) Run chart 
E) Taguchi Loss Function (TLF) 
A) Pareto diagram 
B) Fishbone (i.e., Ishikawa) diagram 
C) Cost-of-Quality (COQ) report 
D) Run chart 
E) Taguchi Loss Function (TLF)

Question 18

The "cost of conformance" in a Cost-of-Quality reporting system includes:

Accepted Answer

A) Prevention costs and appraisal costs. 
B) Internal failure costs and external failure costs. 
C) Prevention costs and internal failure costs. 
D) Appraisal costs and internal failure costs. 
E) Prevention costs and external failure costs. 
A) Prevention costs and appraisal costs. 
B) Internal failure costs and external failure costs. 
C) Prevention costs and internal failure costs. 
D) Appraisal costs and internal failure costs. 
E) Prevention costs and external failure costs.

Question 19

The four accepted categories of a Cost of Quality (COQ) Report are prevention, appraisal, internal failure, and external failure. Assume your cost management instructor has given you an assignment related to COQ. You are to relate each of the cost categories above to the preparation of a class project, which is a study of an actual firm's cost management system. The typical student spends 16 hours researching an identified firm, five hours writing the report, and three hours in revising and presenting the report to the class.
Required:
1. Give an example of prevention, appraisal, internal failure, and external failure costs you might encounter in writing and presenting your report. (Example: "Draw up a time budget with necessary deadlines before starting the report" is an example of a prevention cost.)
2. Which of the four category examples you gave for Requirement (1) above has the greatest cost? What has the least cost? What has the greatest benefit? What has the least benefit? (Example: "Not saving word processing on a hard drive or jump drive" is an example of greatest cost in terms of time.)

Accepted Answer

Answer may vary
Feedback:
1. Examples: P

Question 20

Pandra Manufacturing obtained the following measurements on the quality characteristic of the product from its operations in the last few months:
   The company has determined that no customer will accept any unit that deviates more than 0.04 from the target quality characteristic, T, of 0.5. The company estimated that each rejection would cost the company $500.
Required:
1. Calculate the cost coefficient, k, for the Taguchi Quality Loss Function based on the above information.
2. Determine the estimated amount of quality loss, L(x), for each of the observed values of the quality characteristic, x, presented in the above table.
3. Based on the data you generate in response to Requirement 1 above, determine the expected loss given the probabilities presented in the above table. Round your answer to three decimal places.
4. Use the formula EL(x) = k (σ2 + D2) to verify your answer in (2), where σ2 = Σ (x -   )f(x), and D = the deviation of the mean value of the quality characteristic from the target value = (   - T).

Accepted Answer

Answer may vary
Feedback:
1. k = Total q

In a lean accounting system, costs are assigned to products by:

A common characteristic among control charts, histograms, Pareto diagrams, and cause-and-effect diagrams is that they are:

A graphical representation of frequency of occurrence of the factors contributing to an indicated quality problem, ordered from the most to the least frequent, is a(n):

The term performance quality refers to:

Which of the following items is not a tool that can be used by management to detect poor quality in an operation?

Which of the following is not a characteristic of the general framework for managing and controlling quality depicted in Chapter 17?

A proper role for accounting in terms of managing and controlling quality is all of the following except:

Which of the following statements about product quality is not true?

For Cost of Quality (COQ) reporting purposes, materials inspection costs would be classified as:

Which of the following is not an external nonfinancial measure of quality?

Quality costs for services include:

Which of the following statements regarding the meaning of "quality" is true?

A ______________ shows trends in a quality measure over time.

The "cost of conformance" in a Cost-of-Quality reporting system includes:

Short-Term Profit Planning: Cost-Volume-Profit CVP Analysis

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit Cvp Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

Filters

Exam 17: The Management and Control of Quality

In a lean accounting system, costs are assigned to products by:

A common characteristic among control charts, histograms, Pareto diagrams, and cause-and-effect diagrams is that they are:

A graphical representation of frequency of occurrence of the factors contributing to an indicated quality problem, ordered from the most to the least frequent, is a(n):

The term performance quality refers to:

Which of the following items is not a tool that can be used by management to detect poor quality in an operation?

Which of the following is not a characteristic of the general framework for managing and controlling quality depicted in Chapter 17?

A proper role for accounting in terms of managing and controlling quality is all of the following except:

Which of the following statements about product quality is not true?

For Cost of Quality (COQ) reporting purposes, materials inspection costs would be classified as:

Which of the following is not an external nonfinancial measure of quality?

Quality costs for services include:

Which of the following statements regarding the meaning of "quality" is true?

A ______________ shows trends in a quality measure over time.

The "cost of conformance" in a Cost-of-Quality reporting system includes:

Short-Term Profit Planning: Cost-Volume-Profit CVP Analysis

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit Cvp Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

Filters