Question 1

Inspection costs for reworked units would be classified,for COQ reporting purposes,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 2

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

Feedback: No set solution to the above

Question 3

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 4

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 5

Value stream income statements,which are part of a lean accounting system,have all of the following characteristics except:

Accepted Answer

A) They report segment profits in the form of value streams. 
B) They attempt to separate out the short-term effects of reductions in inventory. 
C) They separate traceable from non-traceable costs on the income statement. 
D) They calculate average costs for units in each value stream. 
E) They eliminate the need to deal with indirect costs. 
A) They report segment profits in the form of value streams. 
B) They attempt to separate out the short-term effects of reductions in inventory. 
C) They separate traceable from non-traceable costs on the income statement. 
D) They calculate average costs for units in each value stream. 
E) They eliminate the need to deal with indirect costs.

Question 6

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 7

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 8

Verizon Manufacturing Company spent $400,000 in 2009 to inspect incoming components.Of the $400,000,$240,000 is fixed appraisal costs.The variable inspection cost is $0.20 per component.It takes two components for each finished product.Internal failure costs average $80 per failed unit of finished goods.In 2009,five percent of all completed items had to be reworked.External failure costs average $200 per failed unit.The company's average external failures are one percent of units sold.The company manufactures all units as ordered and carries no materials inventories.Seeking to decrease its total cost of quality (COQ)Verizon contracted Quality-is-Free Consultants,Inc.(QIFC)to study ways to improve product quality and to reduce costs.Upon completion of the study,QIFC recommended automatic inspection equipment that requires $60,000 annual cost for training and $150,000 for equipment rental and maintenance.The new equipment will eliminate $40,000 of the fixed appraisal costs,reduce the amount of unacceptable product units in the manufacturing process by 10 percent,and cut product failures by half.The company paid the consulting firm $100,000 in early January 2010 for the project.Verizon expects no changes in its operating level in the foreseeable future.What is the change in total quality cost projected for 2010?

Accepted Answer

A) $400,000 decrease. 
B) $290,000 decrease. 
C) $550,000 decrease. 
D) $560,000 decrease. 
E) $580,000 decrease. 
A) $400,000 decrease. 
B) $290,000 decrease. 
C) $550,000 decrease. 
D) $560,000 decrease. 
E) $580,000 decrease.

Question 9

Within the context of managing and controlling quality,the term "tolerance" refers to all of the following except:

Accepted Answer

A) An approach to defining quality expectations for a process or output. 
B) An acceptable range for a given quality characteristic,such as diameter or thickness. 
C) An input to defining product specifications (i.e. ,"product specs"). 
D) 1 minus the cost coefficient,k,in the Taguchi loss function. 
A) An approach to defining quality expectations for a process or output. 
B) An acceptable range for a given quality characteristic,such as diameter or thickness. 
C) An input to defining product specifications (i.e. ,"product specs"). 
D) 1 minus the cost coefficient,k,in the Taguchi loss function.

Question 10

Ladder Manufacturing specifies the quality characteristic of one of its popular products to be 0.400"  $\pm$ 0.010.An analysis of company records for the last two years suggests that the average cost for warranty repair or replacement is $100 per unit.The customer service manager believes that the product is likely to fail during the warranty period when the quality characteristic exceeds on either side of the target of 0.400,by the tolerance of 0.010.What is the amount of the estimated loss,L(x),using a Taguchi loss function,when the actual quality characteristic,x,is 0.405?

Accepted Answer

A) $25. 
B) $5,000. 
C) $10,000. 
D) $400,000. 
E) $405,000. 
A) $25. 
B) $5,000. 
C) $10,000. 
D) $400,000. 
E) $405,000.

Question 11

Cari and Jeremy just bought a bed and breakfast inn at a very attractive price.The business had been doing poorly.Before they reopened the inn for business,they attended a seminar on operating a high-quality business.Now that they are ready to open the inn,they need some advice on quality costs and management.
Required: Identify four categories of quality costs in a Cost-of-Quality (COQ)reporting system.In addition,provide three examples of costs within each of the four categories.

Accepted Answer

Feedback: Prevention: Hiring employees

Question 12

The four categories of cost associated with a COQ system are:

Accepted Answer

A) External failure,internal failure,prevention,and carrying. 
B) External failure,internal failure,prevention,and appraisal. 
C) External failure,internal failure,training,and appraisal. 
D) Warranty,product liability,training,and appraisal. 
E) Warranty,product liability,prevention,and appraisal. 
A) External failure,internal failure,prevention,and carrying. 
B) External failure,internal failure,prevention,and appraisal. 
C) External failure,internal failure,training,and appraisal. 
D) Warranty,product liability,training,and appraisal. 
E) Warranty,product liability,prevention,and appraisal.

Question 13

Pandra Manufacturing obtained the following measurements on the quality characteristic of the product from its operations in the last few months:

Accepted Answer

The company has determined that no custo

Question 14

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 15

Costs incurred as a result of poor quality found through appraisal prior to delivery of the product to the customer are:

Accepted Answer

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

Question 16

Pandra Manufacturing specifies the quality characteristic of one of its popular products to be 0.500"  $\pm$0.020.An analysis of company records for the last two years suggests that the average cost for warranty repair or replacement is $125 per unit.The customer service manager believes that the product is likely to fail during the warranty period when the quality characteristic exceeds on either side of the target of 0.500,by the tolerance of 0.020.What is the amount of the estimated loss using a Taguchi loss function if the actual quality characteristic,x,is 0.510?

Accepted Answer

A) $7.8125. 
B) $31.25. 
C) $78.125. 
D) $3,125. 
E) $7,812.50. 
A) $7.8125. 
B) $31.25. 
C) $78.125. 
D) $3,125. 
E) $7,812.50.

Question 17

Which of the following is not a characteristic of a lean accounting system?

Accepted Answer

A) Calculated costs are used in setting product prices. 
B) Reporting is done frequently (often weekly,or even daily). 
C) Product aggregation-product costs are determined at the value-stream level. 
D) Use of average costs for products in each value stream. 
E) Includes,in the form of box score report,nonfinancial as well as financial performance results. 
A) Calculated costs are used in setting product prices. 
B) Reporting is done frequently (often weekly,or even daily). 
C) Product aggregation-product costs are determined at the value-stream level. 
D) Use of average costs for products in each value stream. 
E) Includes,in the form of box score report,nonfinancial as well as financial performance results.

Question 18

Which of the following is not a nonfinancial quality metric?

Accepted Answer

A) Process yield (i.e. ,good output/total output). 
B) Number of defective parts produced (e.g. ,parts-per-million,ppm). 
C) Number of machine setups. 
D) Machine up-time (or,machine down-time). 
E) Trend in dollar amount of inventory held. 
A) Process yield (i.e. ,good output/total output). 
B) Number of defective parts produced (e.g. ,parts-per-million,ppm). 
C) Number of machine setups. 
D) Machine up-time (or,machine down-time). 
E) Trend in dollar amount of inventory held.

Question 19

List and explain three tools that can be used to identify quality problems.

Accepted Answer

Feedback: (1)A control chart is a graph

Question 20

The Bulldog Company incurred the following quality-related costs:

Accepted Answer

Required:Calculate
(1)Total prevention c

Inspection costs for reworked units would be classified,for COQ reporting purposes,as:

A ______________ shows trends in a quality measure over time.

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

Value stream income statements,which are part of a lean accounting system,have all of the following characteristics except:

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

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

Within the context of managing and controlling quality,the term "tolerance" refers to all of the following except:

The four categories of cost associated with a COQ system are:

Pandra Manufacturing obtained the following measurements on the quality characteristic of the product from its operations in the last few months:

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

Costs incurred as a result of poor quality found through appraisal prior to delivery of the product to the customer are:

Which of the following is not a characteristic of a lean accounting system?

Which of the following is not a nonfinancial quality metric?

List and explain three tools that can be used to identify quality problems.

The Bulldog Company incurred the following quality-related costs:

Cost Management and Strategy

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

Profit Planning: Cost-Volume-Profit 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 and 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

Management Compensation, Business Analysis, and Business Valuation

Filters

Exam 17: The Management and Control of Quality

Inspection costs for reworked units would be classified,for COQ reporting purposes,as:

A ______________ shows trends in a quality measure over time.

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

Value stream income statements,which are part of a lean accounting system,have all of the following characteristics except:

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

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

Within the context of managing and controlling quality,the term "tolerance" refers to all of the following except:

The four categories of cost associated with a COQ system are:

Pandra Manufacturing obtained the following measurements on the quality characteristic of the product from its operations in the last few months:

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

Costs incurred as a result of poor quality found through appraisal prior to delivery of the product to the customer are:

Which of the following is not a characteristic of a lean accounting system?

Which of the following is not a nonfinancial quality metric?

List and explain three tools that can be used to identify quality problems.

The Bulldog Company incurred the following quality-related costs:

Cost Management and Strategy

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

Profit Planning: Cost-Volume-Profit 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 and 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

Management Compensation, Business Analysis, and Business Valuation

Filters