Question 1

How does an ERP system differ from an MIS?

Accepted Answer

A)  The ERP system informally links the different areas of management for specific purposes. 
B)  There is no difference. 
C)  The ERP system combines all areas of management into one centralized data warehouse. 
D)  The ERP system can be used only in a service business. 
A)  The ERP system informally links the different areas of management for specific purposes. 
B)  There is no difference. 
C)  The ERP system combines all areas of management into one centralized data warehouse. 
D)  The ERP system can be used only in a service business.

Question 2

The overall objective of controlling the costs of quality is to eliminate

Accepted Answer

A)  appraisal costs. 
B)  costs of nonconformance. 
C)  costs of conformance. 
D)  the costs of quality. 
A)  appraisal costs. 
B)  costs of nonconformance. 
C)  costs of conformance. 
D)  the costs of quality.

Question 3

As a consequence of many manufacturing firms attempting to reduce the number of suppliers with which they deal,vendors that supply high-quality products and reliable delivery schedules may expect increased business.

Accepted Answer

A) True 
 B)False

Question 4

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 ratio of costs of conformance to total costs of quality.

Accepted Answer

A)  44.6% 
B)  47.6% 
C)  50.1% 
D)  100% 
A)  44.6% 
B)  47.6% 
C)  50.1% 
D)  100%

Question 5

Total quality management requires all business functions to work together to ensure product quality.

Accepted Answer

A) True 
 B)False

Question 6

The primary focus of a management information system is management of costs.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following specific measures of vendor quality would be used when evaluating vendors that supply a company with direct materials?

Accepted Answer

A)  Defect-free material as a percentage of total materials received 
B)  Number of customer complaints 
C)  Time it takes to make a product 
D)  All would be considered to assess vendor quality of direct materials. 
A)  Defect-free material as a percentage of total materials received 
B)  Number of customer complaints 
C)  Time it takes to make a product 
D)  All would be considered to assess vendor quality of direct materials.

Question 8

The Malcolm Baldrige Quality Award was created by the U.S.Congress.

Accepted Answer

A) True 
 B)False

Question 9

In the new manufacturing environment,the point of sale and shipment of a product ends the management accountant's responsibility with respect to the product.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Travis Morgan is the chief accountant for Hill Industries.The company has three divisions that manufacture computer disk drives.The industry is very competitive,and Hill 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.Travis Morgan 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 him:
 $\begin{array}{|l|r|r|r|r|}
\hline&&\text { Orange County }&\text { San Diego } \ 
&\text { L.A. County } &\text { Division }&\text { County Division }&\text { Company } \
&\text { Division }&&&\text { Totals }\
\hline \text { Sales } & \$1,25,000 &\$1,050,00 &\$1,200,000 &\$3, 375,000 \
\hline \text { Appraisal costs } & \$18,640 & \$11,16 & \$ 18,900&\$ 48,700 \
\hline \text { External failure costs } &  18,100 & 22,60 &12,100 &52,800 \
\hline \text { Internal failure costs } & 16,400 & 21,900 & 14,300 & 52,600 \
\hline \text { Prevention costs } & 16,660 & 10,140 & 28,100 & 54,900 \
\hline \text { Total costs of quality } & \$ 69,800 & \$ 65,800 & \$ 73,400 & \$ 209,000 \
\hline
\end{array}$  
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 12

The two components of costs of quality are costs of conformance and costs of nonconformance.

Accepted Answer

A) True 
 B)False

Question 13

Quality costs of conformance and costs of nonconformance are related to each other

Accepted Answer

A)  rarely. 
B)  directly. 
C)  indirectly. 
D)  inversely. 
A)  rarely. 
B)  directly. 
C)  indirectly. 
D)  inversely.

Question 14

Internal failure costs and prevention costs make up the costs of conformance.

Accepted Answer

A) True 
 B)False

Question 15

Some companies have moved to JIT without changing the substance of their accounting systems.Relying on the former accounting system may present problems for management because

Accepted Answer

A)  traditional accounting systems are designed to track items (labor efficiency, purchase price, overhead absorption) that are no longer primary concerns of management. 
B)  control of cost drivers will be lost. 
C)  managers do not understand the new manufacturing environment. 
D)  traditional accounting systems discourage the creation of large inventories that are necessary to ensure uninterrupted production runs. 
A)  traditional accounting systems are designed to track items (labor efficiency, purchase price, overhead absorption) that are no longer primary concerns of management. 
B)  control of cost drivers will be lost. 
C)  managers do not understand the new manufacturing environment. 
D)  traditional accounting systems discourage the creation of large inventories that are necessary to ensure uninterrupted production runs.

Question 16

Information captured by a management information system allows managers to do all of the following except

Accepted Answer

A)  determine accurate product or service costs. 
B)  improve processes. 
C)  provide timely feedback. 
D)  satisfy all customer inquiries. 
A)  determine accurate product or service costs. 
B)  improve processes. 
C)  provide timely feedback. 
D)  satisfy all customer inquiries.

Question 17

The key to good quality control is to evaluate quality early enough so that changes are made before the product is sold.

Accepted Answer

A) True 
 B)False

Question 18

The primary focus of a management information system is on the management of

Accepted Answer

A)  people. 
B)  costs. 
C)  activities. 
D)  time. 
A)  people. 
B)  costs. 
C)  activities. 
D)  time.

Question 19

When a firm changes to a JIT operating and management philosophy,

Accepted Answer

A)  it attempts to increase the number of suppliers it has for each item it uses to ensure a reliable flow of materials into the production process. 
B)  it seeks out the lowest-cost bidder for supplies in order to minimize costs. 
C)  it works more closely with fewer suppliers. 
D)  all of these are correct. 
A)  it attempts to increase the number of suppliers it has for each item it uses to ensure a reliable flow of materials into the production process. 
B)  it seeks out the lowest-cost bidder for supplies in order to minimize costs. 
C)  it works more closely with fewer suppliers. 
D)  all of these are correct.

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 Armstrong County are

Accepted Answer

A)  4.66 percent. 
B)  4.97 percent. 
C)  6.43 percent. 
D)  3.20 percent. 
A)  4.66 percent. 
B)  4.97 percent. 
C)  6.43 percent. 
D)  3.20 percent.

Exam 27: Quality Management and Measurement

How does an ERP system differ from an MIS?

The overall objective of controlling the costs of quality is to eliminate

As a consequence of many manufacturing firms attempting to reduce the number of suppliers with which they deal,vendors that supply high-quality products and reliable delivery schedules may expect increased business.

Total quality management requires all business functions to work together to ensure product quality.

The primary focus of a management information system is management of costs.

Which of the following specific measures of vendor quality would be used when evaluating vendors that supply a company with direct materials?

The Malcolm Baldrige Quality Award was created by the U.S.Congress.

In the new manufacturing environment,the point of sale and shipment of a product ends the management accountant's responsibility with respect to the product.

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

The two components of costs of quality are costs of conformance and costs of nonconformance.

Quality costs of conformance and costs of nonconformance are related to each other

Internal failure costs and prevention costs make up the costs of conformance.

Some companies have moved to JIT without changing the substance of their accounting systems.Relying on the former accounting system may present problems for management because

Information captured by a management information system allows managers to do all of the following except

The key to good quality control is to evaluate quality early enough so that changes are made before the product is sold.

The primary focus of a management information system is on the management of

When a firm changes to a JIT operating and management philosophy,

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

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