Question 1

CAD is

Accepted Answer

A)  a cost allocating decision. 
B)  computer aided downtime. 
C)  a computer-based engineering system. 
D)  an organizational environment. 
A)  a cost allocating decision. 
B)  computer aided downtime. 
C)  a computer-based engineering system. 
D)  an organizational environment. C

Question 2

Which company improved by using the Six Sigma quality standard?

Accepted Answer

A)  Disney 
B)  Lucent Technologies 
C)  Motorola 
D)  Amazon.com 
A)  Disney 
B)  Lucent Technologies 
C)  Motorola 
D)  Amazon.com C

Question 3

United Insurance Agency incurred the following activity costs related to service quality. 
$\begin{array}{ll}\text { Total sales }&\$1,000,000\
\text { Costs of quality: }\
\text { Prevention } & 50,000 \
\text { Appraisal } & 47,000 \
\text { Internal failure } & 36,000 \
\text { External failure } & 64.000
\end{array}$ 
Costs of conformance total

Accepted Answer

A)  $15,500. 
B)  $55,000. 
C)  $120,000. 
D)  $131,400. 
A)  $15,500. 
B)  $55,000. 
C)  $120,000. 
D)  $131,400. D

Question 4

External failure costs are the costs incurred after the product is shipped or the service is delivered to the customer.

Accepted Answer

A) True 
 B)False

Question 5

Internal reports on quality at the Acme Publishing Company generated the following information for the Trade Division for the first three months of the year: 
$\begin{array}{ll}\text { Total sales }&\$1,000,000\
\text { Costs of quality: }\
\text { Prevention } & 50,000 \
\text { Appraisal } & 47,000 \
\text { Internal failure } & 36,000 \
\text { External failure } & 64.000
\end{array}$ 
Compute the ratio of costs of nonconformance to total costs of quality.

Accepted Answer

A)  39.4% 
B)  50.8% 
C)  60.5% 
D)  100% 
A)  39.4% 
B)  50.8% 
C)  60.5% 
D)  100%

Question 6

Woodruff Company manufactures custom-designed medical equipment for paramedic units.In June 2010,the company incurred the following costs of quality: $$\begin{array} { l r } 
\text { Praduct design costs } & \$12,800 \
\text { Praduct recall costs } & 6,700 \
\text { Praduct simulation costs } & 20,500 \
\text { Praduct testing costs } & 8,000 \
\text { Praduct warranty clains } & 3,000 \
\text { Scrap and rewark costs } & 5,000
\end{array}$$ 
Total quality costs of nonconformance for June were

Accepted Answer

A)  $11,700. 
B)  $14,700. 
C)  $22,700. 
D)  $15,700. 
A)  $11,700. 
B)  $14,700. 
C)  $22,700. 
D)  $15,700.

Question 7

The last step in ensuring the production of high-quality products is to have a sound product design.

Accepted Answer

A) True 
 B)False

Question 8

Internal reports on quality at the Acme Publishing Company generated the following information for the Trade Division for the first three months of the year: 
$\begin{array}{ll}\text { Total sales }&\$1,000,000\
\text { Costs of quality: }\
\text { Prevention } & 22,500 \
\text { Appraisal } & 47,000 \
\text { Internal failure } & 36,000 \
\text { External failure } & 64.000
\end{array}$ 
Compute the costs of nonconformance as a percentage of total sales.

Accepted Answer

A)  12.0% 
B)  5.4% 
C)  1.3% 
D)  10% 
A)  12.0% 
B)  5.4% 
C)  1.3% 
D)  10%

Question 9

Erin Stover has been appointed chief accountant for Dancer Industries.The company has three divisions that manufacture floor tiles.The industry is very competitive,and Dancer Industries has lost market share in each of the last four years.Three years ago,management announced a companywide restructuring and the adoption of total quality management.Since that time,each of the divisions has been allowed to chart its own path toward TQM.Stover is new to the company and has asked to see summary figures of the costs of quality for each of the divisions.The following data were presented to her for the past six months: $\begin{array}{lcccc}
&\text { Adams Count } & \text { Armstrong } & \text {Butler County } & \text { Campany } \
 &\text { Division } & \text { Caunty Division } & \text { Division } & \text { Totals } \\
 \text { Sales}& \underline{\$2,650,000}& \underline{\$1,653,125}& \underline{\$2,150,000}& \underline{\$6,453,125}\
 \text { Appraisal costs } & \$  52,110 & \$  27,460 & \$  42,570 & \$  122,140 \
\text { External failure costs } &  44,980  & 49,560  & 31,450 & 125,990 \
 \text { Internal failure costs } &  32,100  & 56,780 & 28,450  & 117,330 \
 \text { Prenention costs } &   \underline{42,240}&  \underline{25,440} &   \underline{58,340} &  \underline{126,020} \
\text { Total cost of quality } & \underline{ \$ 171.430 }& \underline{ \$  159,240 }&  \underline{\$160,810} & \underline{ \$491,480 }\
\end{array}$ 
Conformance costs for Adams County Division are

Accepted Answer

A)  $84,210. 
B)  $87,220. 
C)  $94,350. 
D)  $77,080. 
A)  $84,210. 
B)  $87,220. 
C)  $94,350. 
D)  $77,080.

Question 10

A management information system can be designed to support many different types of management philosophies.

Accepted Answer

A) True 
 B)False

Question 11

W.Edwards Deming stressed improved quality as a means of improving a company's

Accepted Answer

A)  efficiency and profits. 
B)  product flow. 
C)  reputation. 
D)  customer base. 
A)  efficiency and profits. 
B)  product flow. 
C)  reputation. 
D)  customer base.

Question 12

Linda Klein is the chief accountant for Hogan Industries.The company has three divisions that manufacture wind velocity gauges.The industry is very competitive,and Hogan Industries has lost market share in each of the last four years.Three years ago,management announced a companywide restructuring and the adoption of total quality management.Since that time,each of the divisions has been allowed to chart its own path toward TQM.Klein is new to the company and has asked to see summary figures of the costs of quality for each of the divisions.The following data for the past six months were presented to her:
 $\begin{array}{|l|r|r|r|r|}
\hline&\text { Clarion County } &\text { Jefferson } &\text { Crawford } \
&\text { Division }&\text { County Division }&\text { County Division }& \text { Company } \
&&&&\text { Totals }\
\hline \text { Sales } & \$2,200,400 &\$2,100,900&\$2,300,100&\$6,601,400 \
\hline \text { Appraisal costs } & \$41,340 & \$20,980 & \$ 44,210&\$ 106,530 \
\hline \text { External failure costs } &  37,980&53,560 &23,450 &114,990 \
\hline \text { Internal failure costs } & 31,100 & 49,780 & 28,450& 109,330\
\hline \text { Prevention costs } & 44,680 & 18,880& 60,120 & 123,680 \
\hline \text { Total costs of quality } & \$155,100 & \$ 143,200 & \$ 156,230 & \$ 454,530 \
\hline
\end{array}$

Evaluate the three divisions' programs by first computing the costs of conformance and the costs of nonconformance of each division.Also compute quality costs as a percentage of sales for each division.Identify the division that is developing the strongest quality program.Which division has been slowest to react to the management directive of TQM? Defend your answers.Round percentages to three places beyond the decimal point.

Accepted Answer

@#IMG-DLM& 
Each division is spending about the sa

Question 13

All-aboard Travel Agency incurred the following activity costs related to the quality of service.Identify those costs that are costs of conformance (CC)and those costs that are costs of nonconformance (CN).
_____
a. Reservation processing improvements
_____
b. Customer complaint processing
_____
c. Personnel training
_____
d. Computer downtime
_____
e. Proofreading tickets and confirmations

Accepted Answer

a.CC
b.CN

Question 14

Erin Stover has been appointed chief accountant for Dancer Industries.The company has three divisions that manufacture floor tiles.The industry is very competitive,and Dancer Industries has lost market share in each of the last four years.Three years ago,management announced a companywide restructuring and the adoption of total quality management.Since that time,each of the divisions has been allowed to chart its own path toward TQM.Stover is new to the company and has asked to see summary figures of the costs of quality for each of the divisions.The following data were presented to her for the past six months: $\begin{array}{lcccc}
&\text { Adams Count } & \text { Armstrong } & \text {Butler County } & \text { Campany } \
 &\text { Division } & \text { Caunty Division } & \text { Division } & \text { Totals } \\
 \text { Sales}& \underline{\$2,650,000}& \underline{\$1,653,125}& \underline{\$2,150,000}& \underline{\$6,453,125}\
 \text { Appraisal costs } & \$  52,110 & \$  27,460 & \$  42,570 & \$  122,140 \
\text { External failure costs } &  44,980  & 49,560  & 31,450 & 125,990 \
 \text { Internal failure costs } &  32,100  & 56,780 & 28,450  & 117,330 \
 \text { Prenention costs } &   \underline{42,240}&  \underline{25,440} &   \underline{58,340} &  \underline{126,020} \
\text { Total cost of quality } & \underline{ \$ 171.430 }& \underline{ \$  159,240 }&  \underline{\$160,810} & \underline{ \$491,480 }\
\end{array}$

Total quality costs as a percentage of sales for the total company are

Accepted Answer

A)  3.77 percent. 
B)  13.13 percent. 
C)  3.85 percent. 
D)  7.62 percent. 
A)  3.77 percent. 
B)  13.13 percent. 
C)  3.85 percent. 
D)  7.62 percent.

Question 15

The Mahola Company operates as three autonomous divisions.Each division has a general manager in charge of product development,production,and distribution.Management recently adopted total quality management and the divisions now track,record,and analyze their costs and nonfinancial measures of quality.All three divisions are competing in a worldwide,highly competitive marketplace.Sales and quality-related data for April are summarized below.
North Division East Division West Division
   $\begin{array}{lrrr}
&\text { North } && \text { West } \
& \text { Division } & \text { East Division } & \text { Division }\
\text { Nonfinancial measures of quality: }\ 
\text { Defective parts per million } & 4,910 & 1,704 & 3,540 \
\text { Returned order percentage } & 7.40 \% & 2.10 \% & 4.20 \% \
\text { Customer complaints } & 50 & 16 & 30 \
\text { Number of warranty claims } & 29 & 10 & 17
\end{array}$
 
a. Prepare an analysis of the costs of quality of the three divisions. Categorize the costs as follows: costs of conformance with subsets of prevention costs and appraisal costs, and costs of nonconformance with subsets of internal failure costs and external failure costs. Compute the total costs for each category for each division.
b. Compute the percentage of sales of each cost-of-quality total for each division. Round percentages to two places beyond the decimal point.
c. Interpret the cost-of-quality data for each division. Is each division's product of high or low quality? Why? Are the divisions headed in the right direction to be globally competitive?
d. Evaluate the nonfinancial measures of quality in terms of customer satisfaction. Explain your answer.

Accepted Answer

a.and b.See the table below.
 @#IMG-DLM& 
c.Each d

Question 16

Service businesses cannot measure the quality of their work.

Accepted Answer

A) True 
 B)False

Question 17

Though focus on quality is considered a modern management issue,the Deming Application Prize actually originated in 1951.

Accepted Answer

A) True 
 B)False

Question 18

Internal reports on quality at the Acme Publishing Company generated the following information for the Trade Division for the first three months of the year:
 $\begin{array}{ll}\text { Total sales }&\$1,000,000\
\text { Costs of quality: }\
\text { Prevention } & 44,000 \
\text { Appraisal } & 47,000 \
\text { Internal failure } & 36,000 \
\text { External failure } & 64.000
\end{array}$ 
Compute the total costs of quality as a percentage of sales.

Accepted Answer

A)  2.4% 
B)  4.4% 
C)  12.6% 
D)  19.1% 
A)  2.4% 
B)  4.4% 
C)  12.6% 
D)  19.1%

Question 19

Which of these is not a category considered for evaluation when awarding the Malcolm Baldrige Quality Award?

Accepted Answer

A)  Business results 
B)  Leadership 
C)  Net operating income 
D)  Human resource focus 
A)  Business results 
B)  Leadership 
C)  Net operating income 
D)  Human resource focus

Question 20

Erin Stover has been appointed chief accountant for Dancer Industries.The company has three divisions that manufacture floor tiles.The industry is very competitive,and Dancer Industries has lost market share in each of the last four years.Three years ago,management announced a companywide restructuring and the adoption of total quality management.Since that time,each of the divisions has been allowed to chart its own path toward TQM.Stover is new to the company and has asked to see summary figures of the costs of quality for each of the divisions.The following data were presented to her for the past six months: $\begin{array}{lcccc}
&\text { Adams Count } & \text { Armstrong } & \text {Butler County } & \text { Campany } \
 &\text { Division } & \text { Caunty Division } & \text { Division } & \text { Totals } \\
 \text { Sales}& \underline{\$2,650,000}& \underline{\$1,653,125}& \underline{\$2,150,000}& \underline{\$6,453,125}\
 \text { Appraisal costs } & \$  52,110 & \$  27,460 & \$  42,570 & \$  122,140 \
\text { External failure costs } &  44,980  & 49,560  & 31,450 & 125,990 \
 \text { Internal failure costs } &  32,100  & 56,780 & 28,450  & 117,330 \
 \text { Prenention costs } &   \underline{42,240}&  \underline{25,440} &   \underline{58,340} &  \underline{126,020} \
\text { Total cost of quality } & \underline{ \$ 171.430 }& \underline{ \$  159,240 }&  \underline{\$160,810} & \underline{ \$491,480 }\
\end{array}$

Conformance costs as a percentage of sales for the total company are

Accepted Answer

A)  3.91 percent. 
B)  7.62 percent. 
C)  3.85 percent. 
D)  3.77 percent. 
A)  3.91 percent. 
B)  7.62 percent. 
C)  3.85 percent. 
D)  3.77 percent.

CAD is

Which company improved by using the Six Sigma quality standard?

United Insurance Agency incurred the following activity costs related to service quality. Total sales \1 ,000,000 Costs of quality: Prevention 50,000 Appraisal 47,000 Internal failure 36,000 External failure 64.000 Costs of conformance total

External failure costs are the costs incurred after the product is shipped or the service is delivered to the customer.

The last step in ensuring the production of high-quality products is to have a sound product design.

A management information system can be designed to support many different types of management philosophies.

W.Edwards Deming stressed improved quality as a means of improving a company's

Service businesses cannot measure the quality of their work.

Though focus on quality is considered a modern management issue,the Deming Application Prize actually originated in 1951.

Which of these is not a category considered for evaluation when awarding the Malcolm Baldrige Quality Award?

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Contributed Capital

Investments

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

The Changing Business Environment - a Managers Perspective

Cost Concepts and Cost Allocation

Costing Systems- Job Order Costing

Costing Systems- Process Costing

Value-Based Systems- Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

Pricing Decisions,incltarget Costing and Transfer Pricing

Financial Analysis of Performance

Filters

Exam 27: Quality Management and Measurement

CAD is

Which company improved by using the Six Sigma quality standard?

United Insurance Agency incurred the following activity costs related to service quality. Total sales \1 ,000,000 Costs of quality: Prevention 50,000 Appraisal 47,000 Internal failure 36,000 External failure 64.000 Costs of conformance total

External failure costs are the costs incurred after the product is shipped or the service is delivered to the customer.

The last step in ensuring the production of high-quality products is to have a sound product design.

A management information system can be designed to support many different types of management philosophies.

W.Edwards Deming stressed improved quality as a means of improving a company's

Service businesses cannot measure the quality of their work.

Though focus on quality is considered a modern management issue,the Deming Application Prize actually originated in 1951.

Which of these is not a category considered for evaluation when awarding the Malcolm Baldrige Quality Award?

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Contributed Capital

Investments

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

The Changing Business Environment - a Managers Perspective

Cost Concepts and Cost Allocation

Costing Systems- Job Order Costing

Costing Systems- Process Costing

Value-Based Systems- Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

Pricing Decisions,incltarget Costing and Transfer Pricing

Financial Analysis of Performance

Filters