Question 1

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

Accepted Answer

A) True 
 B)False  True

Question 2

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: $\begin{array}{lr}
\text { Total sales } & \$ 1,000,000 \
\text { Costs of quality: } & \
\text { Prevention } & 44,000 \
\text { Appraisal } & 47,000 \
\text { Internal failure } & 36,000 \
\text { External failure } & 64,000
\end{array}$
 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% D

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  True

Question 4

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:   
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 5

Quality in manufacturing simply means a product has to be dependable and free of defects.

Accepted Answer

A) True 
 B)False

Question 6

The Baldrige performance criteria focus on a single aspect of quality.

Accepted Answer

A) True 
 B)False

Question 7

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:   
Conformance costs for Butler County Division are

Accepted Answer

A)  $100,910. 
B)  $89,790. 
C)  $71,020. 
D)  $59,900. 
A)  $100,910. 
B)  $89,790. 
C)  $71,020. 
D)  $59,900.

Question 8

At present,very few countries belong to the ISO.

Accepted Answer

A) True 
 B)False

Question 9

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:
   
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 10

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.

Question 11

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 12

The term given to the act of a company comparing its processes to similar processes in a successful company is called

Accepted Answer

A)  process mapping. 
B)  TQM. 
C)  benchmarking. 
D)  return on quality. 
A)  process mapping. 
B)  TQM. 
C)  benchmarking. 
D)  return on quality.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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 15

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:   
Nonconformance costs for the total company are

Accepted Answer

A)  $239,470. 
B)  $243,320. 
C)  $252,010. 
D)  $248,160. 
A)  $239,470. 
B)  $243,320. 
C)  $252,010. 
D)  $248,160.

Question 16

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 17

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:   
Nonconformance costs as a percentage of sales for Butler County are

Accepted Answer

A)  2.79 percent. 
B)  3.44 percent. 
C)  4.04 percent. 
D)  4.69 percent. 
A)  2.79 percent. 
B)  3.44 percent. 
C)  4.04 percent. 
D)  4.69 percent.

Question 18

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 di

Question 19

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:  
 Nonconformance costs for Armstrong County Division are

Accepted Answer

A)  $77,020. 
B)  $106,340. 
C)  $52,900. 
D)  $75,000. 
A)  $77,020. 
B)  $106,340. 
C)  $52,900. 
D)  $75,000.

Question 20

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.

Exam 27: Quality Management and Measurement

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

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.

Quality in manufacturing simply means a product has to be dependable and free of defects.

The Baldrige performance criteria focus on a single aspect of quality.

At present,very few countries belong to the ISO.

CAD is

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

The term given to the act of a company comparing its processes to similar processes in a successful company is called

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

How does an ERP system differ from an MIS?

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

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

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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