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

A) $41,300. B) $32,800. C) $40,300. D) $43,800. A) $41,300. B) $32,800. C) $40,300. D) $43,800.

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: $\begin{array}{c} \begin{array}{|l} \hline\\\\ \hline\\ \hline\text{Sales}\\ \hline\text{Appraisil costs}\\ \hline\text{External failure costs}\\ \hline\text{Internal failure costs}\\ \hline\text{Prevention costs}\\ \hline\text{Total costs of quality}\\ \hline\\ \hline\\ \end{array} \begin{array}{|l|l|} \hline \text { Adaus County Division } & \text { Aruistrong County } \\ & \text { Division } \\ \hline & \\ \hline \$ 2,650,000 & \$ 1,653,125 \\ \hline \$ 52,110 & \$ 27,460 \\ \hline 44,980 & 49,560 \\ \hline 32,100 & 56,780 \\ \hline 42,240 & 25,440 \\ \hline \$171,430 & \$ 159,240 \\ \hline & \\ \hline & \\ \end{array} \begin{array}{l|l|} \hline \text { Butler County Division}&\text{Conpany Totals }\\ & \\ \hline \\ \hline \$ 2,150,000 & \$ 6,453,125 \\ \hline \$ 42,570 & \$ 122,140 \\ \hline 31,450 & 125,990 \\ \hline 28,450 & 117,330 \\ \hline 58,340 & 126,020 \\ \hline \$ 160,810 & \$ 491,480 \\ \hline & \\ \hline &\\ \end{array} \end{array}$ Total quality costs as a percentage of sales for Adams County are

A) 2.91 percent. B) 3.56 percent. C) 6.47 percent. D) 9.63 percent. A) 2.91 percent. B) 3.56 percent. C) 6.47 percent. D) 9.63 percent.

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

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

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 \(\begin{array}{|l|c|c|c|} \hline &\text {North Division}& \text {East Division}& \text {West Division}\\ \hline\\ \hline \text { Annual sales } &\underline{\$12,000.000}&\underline{\$9,000.000}&\underline{\$14,000.000}\\ \hline \text { Costs of quality. }\\ \hline\text { Setup for testing }&\$73,000&\$111,000&\$190,300\\ \hline\text { Quality audits } \$78,000&260,000&142,800\\ \hline \text { Failure analysis } & 125,000 & 15,950 & 93,300 \\ \hline \text { Quality trairing of employees } &145,500&180,000&280,700\\ \hline \text { Scrap and rework }&259,000&10,800&167,200 \\ \hline \text { Preventive maintenance } & 146,000 & 139,500 & 130,900 \\ \hline \text { Warranty claims } & 391,250 & 95,100 & 321,200 \\ \hline\text { Customer service }&153,500&227,850&182,800 \\ \hline \text { Quality engineering }&\$344,500&418,500&428,400 \\ \hline\text { Prochuct simulation and development } &41,000&178,000&170,900\\ \hline \text { Losses caused by vendor scrap }84,000&18,250&89,500\\ \hline \text { Returned goods } &591,250&172,050&476,000\\ \hline \text { Total costs of quality }&\$2,532,000&\$1,827,000&\$2,674,000\\ \hline \end{array}\) $\begin{array}{|l|l|l|l|l} \hline & \text { North Division } & \text { East Division } & \text { West division } \\ \hline \text { Nonfinancial measures of quality. } & & & \\\hline \text { Defective parts per million } & 4,910 & 1,704 & 3,540 \\ \hline \text { Returned order percentage } & 7.40 \% & 2.10 \% & 4.20 \% \\ \hline \text { Customer complaints } & 50 & 16 & 30 \\ \hline \text { Number of warranty claims } & 29 & 10 & 17 \\ \hline \end{array}$ 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.

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

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: $\begin{array}{c} \begin{array}{|l} \hline\\\\ \hline\\ \hline\text{Sales}\\ \hline\text{Appraisil costs}\\ \hline\text{External failure costs}\\ \hline\text{Internal failure costs}\\ \hline\text{Prevention costs}\\ \hline\text{Total costs of quality}\\ \hline\\ \hline\\ \end{array} \begin{array}{|l|l|} \hline \text { Adaus County Division } & \text { Aruistrong County } \\ & \text { Division } \\ \hline & \\ \hline \$ 2,650,000 & \$ 1,653,125 \\ \hline \$ 52,110 & \$ 27,460 \\ \hline 44,980 & 49,560 \\ \hline 32,100 & 56,780 \\ \hline 42,240 & 25,440 \\ \hline \$171,430 & \$ 159,240 \\ \hline & \\ \hline & \\ \end{array} \begin{array}{l|l|} \hline \text { Butler County Division}&\text{Conpany Totals }\\ & \\ \hline \\ \hline \$ 2,150,000 & \$ 6,453,125 \\ \hline \$ 42,570 & \$ 122,140 \\ \hline 31,450 & 125,990 \\ \hline 28,450 & 117,330 \\ \hline 58,340 & 126,020 \\ \hline \$ 160,810 & \$ 491,480 \\ \hline & \\ \hline &\\ \end{array} \end{array}$ Nonconformance costs for Armstrong County Division are

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

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: $\begin{array}{c} \begin{array}{|l} \hline\\\\ \hline\\ \hline\text{Sales}\\ \hline\text{Appraisil costs}\\ \hline\text{External failure costs}\\ \hline\text{Internal failure costs}\\ \hline\text{Prevention costs}\\ \hline\text{Total costs of quality}\\ \hline\\ \hline\\ \end{array} \begin{array}{|l|l|} \hline \text { Adaus County Division } & \text { Aruistrong County } \\ & \text { Division } \\ \hline & \\ \hline \$ 2,650,000 & \$ 1,653,125 \\ \hline \$ 52,110 & \$ 27,460 \\ \hline 44,980 & 49,560 \\ \hline 32,100 & 56,780 \\ \hline 42,240 & 25,440 \\ \hline \$171,430 & \$ 159,240 \\ \hline & \\ \hline & \\ \end{array} \begin{array}{l|l|} \hline \text { Butler County Division}&\text{Conpany Totals }\\ & \\ \hline \\ \hline \$ 2,150,000 & \$ 6,453,125 \\ \hline \$ 42,570 & \$ 122,140 \\ \hline 31,450 & 125,990 \\ \hline 28,450 & 117,330 \\ \hline 58,340 & 126,020 \\ \hline \$ 160,810 & \$ 491,480 \\ \hline & \\ \hline &\\ \end{array} \end{array}$ Nonconformance costs as a percentage of sales for Butler County are

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.

Exam 12: Quality Management and Measurement

Woodruff Company manufactures custom-designed medical equipment for paramedic units. In June 2010, the company incurred the following costs of quality: Prochuct design costs \ 12,800 Prochict recall costs 6,700 Product simulation costs 20,500 Product testing costs 8,000 Prochict warranty claims 3,000 Scrap and rework costs 5,000 Total quality costs of conformance for June were

(Multiple Choice)

4.8/5

(36)

Question 41

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

(Multiple Choice)

4.8/5

(33)

Question 42

With which of the following products would the ISO most likely deal?

(Multiple Choice)

4.9/5

(33)

Question 43

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

(True/False)

4.9/5

(38)

Question 44

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: Sales Appraisil costs External failure costs Internal failure costs Prevention costs Total costs of quality Adaus County Division Aruistrong County Division \ 2,650,000 \ 1,653,125 \ 52,110 \ 27,460 44,980 49,560 32,100 56,780 42,240 25,440 \1 71,430 \ 159,240 Butler County Division Conpany Totals \ 2,150,000 \ 6,453,125 \ 42,570 \ 122,140 31,450 125,990 28,450 117,330 58,340 126,020 \ 160,810 \ 491,480 Total quality costs as a percentage of sales for Adams County are

(Multiple Choice)

4.9/5

(31)

Question 45

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

(True/False)

5.0/5

(39)

Question 46

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

(Multiple Choice)

4.9/5

(47)

Question 47

Woodruff Company manufactures custom-designed medical equipment for paramedic units. In June 2010, the company incurred the following costs of quality: Prochuct design costs \ 12,800 Prochict recall costs 6,700 Product simulation costs 20,500 Product testing costs 8,000 Prochict warranty claims 3,000 Scrap and rework costs 5,000 Total quality costs of nonconformance for June were

(Multiple Choice)

4.9/5

(30)

Question 48

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

(True/False)

4.8/5

(33)

Question 49

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 North Division East Division West Division Annual sales Costs of quality. Setup for testing \7 3,000 \1 11,000 \1 90,300 Quality audits \7 8,000 260,000 142,800 Failure analysis 125,000 15,950 93,300 Quality trairing of employees 145,500 180,000 280,700 Scrap and rework 259,000 10,800 167,200 Preventive maintenance 146,000 139,500 130,900 Warranty claims 391,250 95,100 321,200 Customer service 153,500 227,850 182,800 Quality engineering \3 44,500 418,500 428,400 Prochuct simulation and development 41,000 178,000 170,900 Losses caused by vendor scrap 84,000 18,250 89,500 Returned goods 591,250 172,050 476,000 Total costs of quality \2 ,532,000 \1 ,827,000 \2 ,674,000 North Division East Division West division Nonfinancial measures of quality. Defective parts per million 4,910 1,704 3,540 Returned order percentage 7.40\% 2.10\% 4.20\% Customer complaints 50 16 30 Number of warranty claims 29 10 17 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.

(Essay)

4.9/5

(37)

Question 50

With respect to product quality,

(Multiple Choice)

4.9/5

(36)

Question 51

Measures of customer complaints and warranty claims are used in tracking

(Multiple Choice)

4.9/5

(37)

Question 52

Which company improved by using the Six Sigma quality standard?

(Multiple Choice)

4.8/5

(42)

Question 53

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

(True/False)

4.8/5

(36)

Question 54

Service businesses cannot measure the quality of their work.

(True/False)

4.8/5

(40)

Question 55

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: Sales Appraisil costs External failure costs Internal failure costs Prevention costs Total costs of quality Adaus County Division Aruistrong County Division \ 2,650,000 \ 1,653,125 \ 52,110 \ 27,460 44,980 49,560 32,100 56,780 42,240 25,440 \1 71,430 \ 159,240 Butler County Division Conpany Totals \ 2,150,000 \ 6,453,125 \ 42,570 \ 122,140 31,450 125,990 28,450 117,330 58,340 126,020 \ 160,810 \ 491,480 Nonconformance costs for Armstrong County Division are

(Multiple Choice)

4.9/5

(36)

Question 56

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

(True/False)

4.9/5

(31)

Question 57

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: Sales Appraisil costs External failure costs Internal failure costs Prevention costs Total costs of quality Adaus County Division Aruistrong County Division \ 2,650,000 \ 1,653,125 \ 52,110 \ 27,460 44,980 49,560 32,100 56,780 42,240 25,440 \1 71,430 \ 159,240 Butler County Division Conpany Totals \ 2,150,000 \ 6,453,125 \ 42,570 \ 122,140 31,450 125,990 28,450 117,330 58,340 126,020 \ 160,810 \ 491,480 Nonconformance costs as a percentage of sales for Butler County are

(Multiple Choice)

4.9/5

(31)

Question 58

As a consequence of many manufacturing firms attempting to reduce the number of suppliers with which they deal, vendors that do not supply products with high quality and reliable delivery schedules may expect to be forced out of business.

(True/False)

4.9/5

(38)

Question 59

The award given to companies that achieve distinctive results in implementing total quality control is the

(Multiple Choice)

5.0/5

(38)

Question 60

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

With which of the following products would the ISO most likely deal?

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

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

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

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

With respect to product quality,

Measures of customer complaints and warranty claims are used in tracking

Which company improved by using the Six Sigma quality standard?

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

Service businesses cannot measure the quality of their work.

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

As a consequence of many manufacturing firms attempting to reduce the number of suppliers with which they deal, vendors that do not supply products with high quality and reliable delivery schedules may expect to be forced out of business.

The award given to companies that achieve distinctive results in implementing total quality control is the

The Changing Business Environment - a Managers Perspective

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, Incl Target Costing and Transfer Pricing

Financial Analysis of Performance

Filters