Exam 12: Quality Management and Measurement

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

Traditional management information systems focus on financial reporting.

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

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

The organization that promotes improvement in quality worldwide is called the International Organization for Standardization.

The Deming Application Prize for quality originated in Japan.

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: Total sales \ 1,000,000 Costs of quality: Prevention 50,000 Appraisal 47,000 Internal failure 36,000 External failure 64,000 Compute the ratio of costs of nonconformance to total costs of quality.

Which of the following is not an example of a conformance cost?

Maxine Lavon is the controller for Prater Industries. She has been asked to develop a plan for installing a management information system in her company. She will need to do all of the following to help managers except

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

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

Lipps Company manufactures custom-designed medical equipment for paramedic units. In May 2010, the company incurred the following costs of quality: Prochuct de sign costs \ 8,600 Product recall costs 5,200 Product simulation costs 13,500 Product testing costs 3,500 Product warranty claims 2,000 Scrap and rework costs 3,000 Total quality costs of conformance for May were

Managers' concerns about the quality of a product or service include customer defections.

Traditionally, the point of sale and shipment of a product has ended the management accountant's responsibility with respect to the product. In a new manufacturing environment, the measure of customer satisfaction may be an accounting responsibility too.

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: Total sales \ 1,000,000 Costs of quality: Prevention 44,000 Appraisal 47,000 Internal failure 36,000 External failure 64,000 Compute the ratio of costs of conformance to total costs of quality.

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: Total sales \ 1,000,000 Costs of quality: Prevention 22,500 Appraisal 47,000 Internal failure 36,000 External failure 64,000 Compute the costs of nonconformance as a percentage of total sales.

A management information system is not designed to provide data about individual customers.

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

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: L.A. County Division Orange County Division San Diego County Division Company Totals Sales \ 1,125,000 \ 1,050,000 \ 1,200,000 \ 3,375,000 Appraisal costs \ 18,640 \ 11,160 \ 18,900 \ 48,700 External failure costs 18,100 22,600 12,100 \ 2,800 Internal failure costs 16,400 21,900 14,300 \ 2,600 Prevention costs 16,660 10,140 28,100 54,900 Total costs of quality \ 69,800 \ 65,800 \ 73,400 \ 209,000 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.