Deck 16: Quality and Environmental Cost Management

Question 1

What is the term for costs incurred because products or services fail to meet requirements after delivery to customers?

A)external failure costs
B)internal failure costs
C)appraisal costs
D)prevention costs

Answer 1

A

Question 2

What type of cost are quality training programs classified as?

A)external failure costs
B)internal failure costs
C)appraisal costs
D)prevention costs

Answer 2

D

Question 3

What type of cost is downtime attributed to quality problems?

A)external failure cost
B)internal failure cost
C)appraisal cost
D)prevention cost

Answer 3

B

Question 4

What is the term for costs incurred to determine whether products and services are conforming to requirements?

A)external failure costs
B)internal failure costs
C)appraisal costs
D)prevention costs

Question 5

From the operational content view,which of the following measures should a quality product or service meet or exceed?

A)customer expectations
B)customer satisfaction
C)company targets
D)company standards

Question 6

Lower sales due to poor product performance is an example of which type of cost?

A)external failure cost
B)internal failure cost
C)appraisal cost
D)prevention cost

Question 7

What are the dimensions of quality?

A)reliability,cost,and durability
B)durability,performance,and fitness for use
C)durability,cost,and performance
D)fitness for use,performance,and cost

Question 8

What is the definition of the term "zero defects"?

A)All products conform to specifications.
B)There are no unusable products.
C)All products are usable.
D)There are re-workable products.

Question 9

What type of cost are inspection labour costs classified as?

A)external failure costs
B)internal failure costs
C)appraisal costs
D)prevention costs

Question 10

According to quality experts,what figure should total quality costs?

A)2 to 4 percent of sales
B)2 to 4 percent of total costs
C)2 to 4 percent of profit
D)2 to 4 percent of gross profit

Question 11

How can improving quality increase firm value?

A)Firms can increase activities.
B)Firms can increase costs.
C)Firms can increase customer demand.
D)Firms can increase non-value-added items.

Question 12

What is the term for a predetermined amount of defective product that a company permits to be sold?

A)acceptable quality level
B)Taguchi quality loss function
C)zero defects
D)kaizen costing

Question 13

When is a product classified as defective?

A)It does not appeal to customers.
B)It does not pass inspection.
C)It does not satisfy customers.
D)It does not conform to specifications.

Question 14

Which of the following is an example of a prevention cost?

A)field testing
B)quality audits
C)reinspection
D)repair costs

Question 15

In quality analysis,what does robustness mean?

A)The products do not vary from the target value.
B)The products have a great deal of variation from the target value.
C)The products do not result in high customer satisfaction.
D)The products result in high customer satisfaction.

Question 16

What is the term for a measure of how well a product meets its requirements or specifications?

A)quality of conformance
B)quality of design
C)service quality
D)Taguchi quality loss function

Question 17

What type of cost is an in-process inspection?

A)an external failure cost
B)an internal failure cost
C)an appraisal cost
D)a prevention cost

Question 18

What type of cost is a product inspection classified as?

A)an external failure cost
B)an internal failure cost
C)an appraisal cost
D)a prevention cost

Question 19

For what type of firm is improving quality not an important competitive issue?

A)manufacturing firms only
B)service firms only
C)supplying firms only
D)Monopolistic firms

Question 20

What is the term for costs incurred because poor quality may or does exist?

A)costs of quality
B)internal failure costs
C)external failure costs
D)appraisal costs

Question 21

Which of the following is a method of estimating hidden quality costs?

A)the divider method
B)the market research method
C)the process acceptance sampling
D)the kaizen quality loss function

Question 22

A company produces screw fittings. It is determined that T = 1 inch in diameter. Specification limits allow a variation of plus or minus 0.5 cm. Products produced at values beyond the specification limits lose $10. A sample of five units produced showed the following values:
$$\begin{array} { c c } \text { Unit Number } & \text { Actual Diameter (Y) } \\\text { Unit 1 } & 1.2 \\\text { Unit 2 } & 1.3 \\\text { Unit 3 } & 0.8 \\\text { Unit 4 } & 0.9 \\\text { Unit 5 } & 1.0\end{array}$$

-Refer to the figure.What is k,the constant,in the Taguchi loss function?

A)0.25
B)2.0
C)2.5
D)40

Question 23

What is the robust quality model?

A)One that maintains an acceptable quality level.
B)One that decreases total quality costs by decreasing the number of defective units.
C)One that balances control costs with failure costs.
D)One that relies on warranty work.

Question 24

What is characteristic of the costs according to the robust quality view?

A)Control costs increase without limits.
B)Control costs increase as the robust state approaches.
C)Failure costs can be driven to zero.
D)Failure costs are at a maximum.

Question 25

According to the robust view,the strategy for reducing quality costs is based on which assumption?

A)For every failure there is a root cause.
B)Causes are not preventable.
C)Prevention costs must be outweighed with the benefits.
D)Continually redirecting prevention efforts will lead to further improvements.

Question 26

A company produces screw fittings. It is determined that T = 1 inch in diameter. Specification limits allow a variation of plus or minus 0.5 cm. Products produced at values beyond the specification limits lose $10. A sample of five units produced showed the following values:
$$\begin{array} { c c } \text { Unit Number } & \text { Actual Diameter (Y) } \\\text { Unit 1 } & 1.2 \\\text { Unit 2 } & 1.3 \\\text { Unit 3 } & 0.8 \\\text { Unit 4 } & 0.9 \\\text { Unit 5 } & 1.0\end{array}$$

-Refer to the figure.What is the cost of hidden loss for production of 50,000 units?

A)$34,722
B)$72,000
C)$90,000
D)$500,000

Question 27

What type of cost is warranty work?

A)external failure cost
B)internal failure cost
C)appraisal cost
D)prevention cost

Question 28

What assumes that the total failure cost is some multiplier of measured failure costs?

A)the multiplier method
B)the market research method
C)the process acceptance sampling
D)the Taguchi quality loss function

Question 29

Which of the following assumes that variation from target values of a quality characteristic causes hidden quality costs?

A)multiplier method
B)market research method
C)process acceptance sampling
D)Taguchi quality loss function

Question 30

Which of the following uses customer surveys and interviews by sales personnel to estimate future profit losses?

A)the multiplier method
B)the market research method
C)the process acceptance sampling method
D)the Taguchi quality loss function

Question 31

What type of cost is reinspection of reworked products?

A)external failure cost
B)internal failure cost
C)appraisal cost
D)prevention cost

Question 32

A company produces screw fittings. It is determined that T = 1 inch in diameter. Specification limits allow a variation of plus or minus 0.5 cm. Products produced at values beyond the specification limits lose $10. A sample of five units produced showed the following values:
$$\begin{array} { c c } \text { Unit Number } & \text { Actual Diameter (Y) } \\\text { Unit 1 } & 1.2 \\\text { Unit 2 } & 1.3 \\\text { Unit 3 } & 0.8 \\\text { Unit 4 } & 0.9 \\\text { Unit 5 } & 1.0\end{array}$$

-Refer to the figure.What is the average loss per unit?

A)$1.44
B)$1.80
C)$7.20
D)$10.00

Question 33

What type of cost are the costs of a consumer complaint department?

A)external failure cost
B)internal failure cost
C)appraisal cost
D)prevention cost

Question 34

What are observable quality costs?

A)costs of defects that can be seen
B)costs that are available in the accounting records
C)costs of defective units that get to customers
D)costs that are not available in the accounting records

Question 35

What type of cost are product recalls?

A)external failure cost
B)internal failure cost
C)appraisal cost
D)prevention cost

Question 36

In a quality cost report,quality costs are grouped into categories.Each category of quality costs is then expressed as a percentage of which of the following?

A)total quality costs
B)total costs
C)total sales
D)total defective units

Question 37

What type of cost are labour and overhead incurred for rework of defective products found by an inspector?

A)external failure cost
B)internal failure cost
C)appraisal cost
D)prevention cost

Question 38

As preventive and appraisal costs increase,how will internal and external failure costs likely respond?

A)They will decrease.
B)They will increase.
C)They will remain the same.
D)They will vary with no relation to preventive and appraisal costs.

Question 39

Assume the multiplier method is used and the multiplier is determined to be 3 based on experience.Accounting records show that the measured external failure costs are $500,000.What would be the estimated total external failure costs?

A)$55,556
B)$166,667
C)$1,500,000
D)$4,500,000

Question 40

Assume the multiplier method is used and the multiplier is determined to be 3 based on experience.Accounting records show that the measured external failure costs are $400,000.What would be the estimated hidden external failure costs?

A)$133,334
B)$400,000
C)$800,000
D)$1,200,000

Question 41

At the beginning of the year, John Corporation initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$$\begin{array} { l r r } & \text { Preceding Year } & \text { Current Year } \\\text { Sales } & \$ 2,000,000 & \$2,000,000 \\\text { Quality training } &2,000 & 3,000 \\\text { Material inspections } & 5,00 & 8,000 \\\text { Scrap } & 40,000 & 30,000 \\\text { Rework } & 80,000 & 50,000 \\\text { Product inspection } & 10,000 &20,000 \\\text { Product waranty } &70,000 & 5,000\end{array}$$

-Refer to the figure.For the current year,what percentage of sales are internal failure costs?

A)1.50%
B)2.50%
C)2.90%
D)4.00%

Question 42

In activity-based management,which of the following quality costs would be considered non-value-added?

A)recruiting
B)quality circles
C)supplier certification
D)inspection of materials

Question 43

At the beginning of the year, Grant Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$$\begin{array} { l r r } & \text { Preceding Year } & \text { Current Year } \\\text { Sales } & \$ 3,000,000 & \$ 3,000,000 \\\text { Quality training } & 3,000 & 4,500 \\\text { Material inspections } & 7,500 & 12,000 \\\text { Scrap } & 60,000 & 45,000 \\\text { Rework } & 120,000 & 75,000 \\\text { Product inspection } & 15,000 & 30,000 \\\text { Product waranty } & 105,000 & 82,500\end{array}$$

-Refer to the figure.For the current year,what percentage of sales are external failure costs?

A)1.50%
B)2.50%
C)2.75%
D)4.25%

Question 44

The following information pertains to Kanyon, Inc., for the current year:
$$\begin{array} { l r } \text { Sales } & \$ 2,000,000 \\\text { Internal failure costs } & 250,000 \\\text { External failure costs } & 100,000 \\\text { Appraisal costs } & 70,000 \\\text { Prevention costs } & 50,000 \\\text { Cost af goods sold } & 750,000\end{array}$$

-Refer to the figure.Quality costs are what percentage of sales?

A)2.5%
B)6.0%
C)15.0%
D)23.5%

Question 45

At the beginning of the year, Andrew Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$\begin{array}{lrr} &\underline{\text {Preceding Year}}& \underline{\text {Current Year}}\\\text { Sales } & \$ 2,400,000 & \$ 2,400,000 \\\text { Quality training } & 30,000 & 48,000 \\\text { Material inspections } & 7,000 & 8,000 \\\text { Scrap } & 48,000 & 30,00 \\\text { Rework } & 60,000 & 48,000 \\\text { Product inspection } & 10,000 & 12,000 \\\text { Product warranty } & 36,000 & 24,000\end{array}$

-Refer to the figure.For the current year,what percentage of sales are external failure costs?

A)0.8350%
B)1.0000%
C)1.1875%
D)1.5350%

Question 46

At the beginning of the year, Andrew Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$\begin{array}{lrr} &\underline{\text {Preceding Year}}& \underline{\text {Current Year}}\\\text { Sales } & \$ 2,400,000 & \$ 2,400,000 \\\text { Quality training } & 30,000 & 48,000 \\\text { Material inspections } & 7,000 & 8,000 \\\text { Scrap } & 48,000 & 30,00 \\\text { Rework } & 60,000 & 48,000 \\\text { Product inspection } & 10,000 & 12,000 \\\text { Product warranty } & 36,000 & 24,000\end{array}$

-Refer to the figure.For the current year,what percentage of sales are appraisal costs?

A)0.333%
B)0.500%
C)0.833%
D)3.333%

Question 47

At the beginning of the year, Grant Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$$\begin{array} { l r r } & \text { Preceding Year } & \text { Current Year } \\\text { Sales } & \$ 3,000,000 & \$ 3,000,000 \\\text { Quality training } & 3,000 & 4,500 \\\text { Material inspections } & 7,500 & 12,000 \\\text { Scrap } & 60,000 & 45,000 \\\text { Rework } & 120,000 & 75,000 \\\text { Product inspection } & 15,000 & 30,000 \\\text { Product waranty } & 105,000 & 82,500\end{array}$$

-Refer to the figure.For the current year,what percentage of sales are internal failure costs?

A)1.50%
B)2.50%
C)2.90%
D)4.00%

Question 48

At the beginning of the year, John Corporation initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$$\begin{array} { l r r } & \text { Preceding Year } & \text { Current Year } \\\text { Sales } & \$ 2,000,000 & \$2,000,000 \\\text { Quality training } &2,000 & 3,000 \\\text { Material inspections } & 5,00 & 8,000 \\\text { Scrap } & 40,000 & 30,000 \\\text { Rework } & 80,000 & 50,000 \\\text { Product inspection } & 10,000 &20,000 \\\text { Product waranty } &70,000 & 5,000\end{array}$$

-Refer to the figure.For the current year,what percentage of sales are prevention costs?

A)0.05%
B)0.15%
C)0.65%
D)1.50%

Question 49

At the beginning of the year, Andrew Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$\begin{array}{lrr} &\underline{\text {Preceding Year}}& \underline{\text {Current Year}}\\\text { Sales } & \$ 2,400,000 & \$ 2,400,000 \\\text { Quality training } & 30,000 & 48,000 \\\text { Material inspections } & 7,000 & 8,000 \\\text { Scrap } & 48,000 & 30,00 \\\text { Rework } & 60,000 & 48,000 \\\text { Product inspection } & 10,000 & 12,000 \\\text { Product warranty } & 36,000 & 24,000\end{array}$

-Refer to the figure.For the current year,what percentage of sales are prevention costs?

A)2.00%
B)7.00%
C)8.25%
D)9.00%

Question 50

The following information pertains to Bull Company for the current year:
$\begin{array}{lr}\text { Sales } & \$ 1,000,000 \\\text { Internal failure costs } & 125,000 \\\text { External failure costs } & 50,000 \\\text { Appraisal costs } & 35,000 \\\text { Prevention costs } & 25,000 \\\text { Cost of goods sold } & 375,000\end{array}$

-Refer to the figure.If quality costs were reduced to 2.5 percent of sales,by how much would profits increase?

A)$25,000
B)$125,000
C)$180,000
D)$210,000

Question 51

At the beginning of the year, Grant Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$$\begin{array} { l r r } & \text { Preceding Year } & \text { Current Year } \\\text { Sales } & \$ 3,000,000 & \$ 3,000,000 \\\text { Quality training } & 3,000 & 4,500 \\\text { Material inspections } & 7,500 & 12,000 \\\text { Scrap } & 60,000 & 45,000 \\\text { Rework } & 120,000 & 75,000 \\\text { Product inspection } & 15,000 & 30,000 \\\text { Product waranty } & 105,000 & 82,500\end{array}$$

-Refer to the figure.As a result of quality improvements,by how much have profits increased?

A)$15,000
B)$22,500
C)$61,500
D)$97,500

Question 52

The following information pertains to Kanyon, Inc., for the current year:
$$\begin{array} { l r } \text { Sales } & \$ 2,000,000 \\\text { Internal failure costs } & 250,000 \\\text { External failure costs } & 100,000 \\\text { Appraisal costs } & 70,000 \\\text { Prevention costs } & 50,000 \\\text { Cost af goods sold } & 750,000\end{array}$$

-Refer to the figure.If quality costs were reduced to 2.5 percent of sales,by how much would profits increase?

A)$250,000
B)$300,000
C)$420,000
D)$500,000

Question 53

The following information pertains to Kanyon, Inc., for the current year:
$$\begin{array} { l r } \text { Sales } & \$ 2,000,000 \\\text { Internal failure costs } & 250,000 \\\text { External failure costs } & 100,000 \\\text { Appraisal costs } & 70,000 \\\text { Prevention costs } & 50,000 \\\text { Cost af goods sold } & 750,000\end{array}$$

-Refer to the figure.If quality costs were reduced to 2.5 percent of sales,by how much would profits increase?

A)$250,000
B)$500,000
C)$850,000
D)$1,000,000

Question 54

At the beginning of the year, Andrew Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$\begin{array}{lrr} &\underline{\text {Preceding Year}}& \underline{\text {Current Year}}\\\text { Sales } & \$ 2,400,000 & \$ 2,400,000 \\\text { Quality training } & 30,000 & 48,000 \\\text { Material inspections } & 7,000 & 8,000 \\\text { Scrap } & 48,000 & 30,00 \\\text { Rework } & 60,000 & 48,000 \\\text { Product inspection } & 10,000 & 12,000 \\\text { Product warranty } & 36,000 & 24,000\end{array}$

-Refer to the figure.For the current year,what percentage of sales are internal failure costs?

A)1.25%
B)2.00%
C)3.25%
D)4.25%

Question 55

At the beginning of the year, Grant Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$$\begin{array} { l r r } & \text { Preceding Year } & \text { Current Year } \\\text { Sales } & \$ 3,000,000 & \$ 3,000,000 \\\text { Quality training } & 3,000 & 4,500 \\\text { Material inspections } & 7,500 & 12,000 \\\text { Scrap } & 60,000 & 45,000 \\\text { Rework } & 120,000 & 75,000 \\\text { Product inspection } & 15,000 & 30,000 \\\text { Product waranty } & 105,000 & 82,500\end{array}$$

-Refer to the figure.For the current year,what percentage of sales are appraisal costs?

A)0.14%
B)0.40%
C)1.00%
D)1.40%

Question 56

At the beginning of the year, Grant Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$$\begin{array} { l r r } & \text { Preceding Year } & \text { Current Year } \\\text { Sales } & \$ 3,000,000 & \$ 3,000,000 \\\text { Quality training } & 3,000 & 4,500 \\\text { Material inspections } & 7,500 & 12,000 \\\text { Scrap } & 60,000 & 45,000 \\\text { Rework } & 120,000 & 75,000 \\\text { Product inspection } & 15,000 & 30,000 \\\text { Product waranty } & 105,000 & 82,500\end{array}$$

-Refer to the figure.If quality costs had been reduced to 2.5 percent of sales in the current year,by how much would profits have increased?

A)$37,500
B)$91,500
C)$174,000
D)$255,000

Question 57

The following information pertains to Taft, Inc., for the current year:
$\begin{array}{lr}\text { Sales } & \$ 20,000,000 \\\text { Internal failure costs } & 600,000 \\\text { External failure costs } & 400,000 \\\text { Appraisal costs } & 250,000 \\\text { Prevention costs } & 100,000 \\\text { Cost of goods sold } & 10,000,000\end{array}$


-Refer to the figure.Quality costs are what percentage of sales?

A)3.00%
B)5.00%
C)6.25%
D)6.75%

Question 58

At the beginning of the year, John Corporation initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$$\begin{array} { l r r } & \text { Preceding Year } & \text { Current Year } \\\text { Sales } & \$ 2,000,000 & \$2,000,000 \\\text { Quality training } &2,000 & 3,000 \\\text { Material inspections } & 5,00 & 8,000 \\\text { Scrap } & 40,000 & 30,000 \\\text { Rework } & 80,000 & 50,000 \\\text { Product inspection } & 10,000 &20,000 \\\text { Product waranty } &70,000 & 5,000\end{array}$$

-Refer to the figure.For the current year,what percentage of sales are appraisal costs?

A)0.14%
B)0.40%
C)1.00%
D)1.40%

Question 59

At the beginning of the year, John Corporation initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$$\begin{array} { l r r } & \text { Preceding Year } & \text { Current Year } \\\text { Sales } & \$ 2,000,000 & \$2,000,000 \\\text { Quality training } &2,000 & 3,000 \\\text { Material inspections } & 5,00 & 8,000 \\\text { Scrap } & 40,000 & 30,000 \\\text { Rework } & 80,000 & 50,000 \\\text { Product inspection } & 10,000 &20,000 \\\text { Product waranty } &70,000 & 5,000\end{array}$$

-Refer to the figure.For the current year,what percentage of sales are external failure costs?

A)1.50%
B)2.50%
C)2.75%
D)4.25%

Question 60

At the beginning of the year, Grant Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$$\begin{array} { l r r } & \text { Preceding Year } & \text { Current Year } \\\text { Sales } & \$ 3,000,000 & \$ 3,000,000 \\\text { Quality training } & 3,000 & 4,500 \\\text { Material inspections } & 7,500 & 12,000 \\\text { Scrap } & 60,000 & 45,000 \\\text { Rework } & 120,000 & 75,000 \\\text { Product inspection } & 15,000 & 30,000 \\\text { Product waranty } & 105,000 & 82,500\end{array}$$

-Refer to the figure.For the current year,what percentage of sales are prevention costs?

A)0.05%
B)0.15%
C)0.65%
D)1.50%

Question 61

What is ISO 9000?

A)ISO 9000 is a standard of quality measurement.
B)ISO 9000 is a European quality measure.
C)ISO 9000 certifies the quality of the product.
D)ISO 9000 certifies the firm's commitment to continuous improvement.

Question 62

What are the two essential elements of quality cost performance reports?

A)kaizen standards and Taguchi quality loss function
B)Taguchi quality loss function and AQL
C)actual and expected outcomes
D)kaizen standards and AQL

Question 63

What is the term for a quality report that compares current actual quality costs with budgeted quality costs for the future?

A)interim quality performance report
B)one-year quality performance report
C)multiple-period quality trend report
D)long-range quality performance report

Question 64

What is the term for a goal that is based on short-run quality goals?

A)interim quality performance report
B)one-year quality performance report
C)multiple-period quality trend report
D)interim quality standard

Question 65

Which of the following is a monetary incentive?

A)an award to recognize an employee for his or her efforts
B)an error-cause identification program
C)public recognition for outstanding achievement
D)gainsharing

Question 66

At the beginning of the year, Jim Jackson initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$\begin{array}{lrr}&\underline{\text { Preceding Year }} &\underline{\text { Current Year}}\\\text { Sales } & \$ 2,400,000 & \$ 2,000,000 \\\text { Scrap } & 40,000 & 30,000 \\\text { Rework } & 100,000 & 70,000 \\\text { Product inspection } & 12,000 & 18,000 \\\text { Quality training } & 4,000 & 5,000 \\\text { Material inspections } & 8,000 & 13,000 \\\text { Product warranty } & 80,000 & 50,000\end{array}$


-Refer to the figure.For the current year,what percentage of sales are appraisal costs?

A)0.25%
B)1.55%
C)1.80%
D)9.30%

Question 67

What is the term for a graph that plots quality costs against time?

A)interim quality performance report
B)one-year quality performance report
C)multiple-period quality trend report
D)long-range quality performance report

Question 68

For which decisions do managers need quality cost information?

A)strategic pricing
B)cost revenue profit analysis
C)cost benefit of quality improvement programs
D)strategic costing

Question 69

At the beginning of the year, Jim Jackson initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$\begin{array}{lrr}&\underline{\text { Preceding Year }} &\underline{\text { Current Year}}\\\text { Sales } & \$ 2,400,000 & \$ 2,000,000 \\\text { Scrap } & 40,000 & 30,000 \\\text { Rework } & 100,000 & 70,000 \\\text { Product inspection } & 12,000 & 18,000 \\\text { Quality training } & 4,000 & 5,000 \\\text { Material inspections } & 8,000 & 13,000 \\\text { Product warranty } & 80,000 & 50,000\end{array}$


-Refer to the figure.As a result of quality improvements,by how much have profits increased?

A)$58,000
B)$186,000
C)$244,000
D)$400,000

Question 70

In activity-based management,which of the following quality costs would be considered value-added?

A)warranties
B)rework
C)supplier certification
D)inspection of materials

Question 71

What is the term for a quality report that compares the current actual quality costs with short-run budgeted quality targets?

A)interim quality performance report
B)one-year quality performance report
C)multiple-period quality trend report
D)long-range quality performance report

Question 72

What is the total quality management standard that is used in the total quality approach?

A)robust zero-defects standard
B)total quality management standard
C)just in time standard
D)optimal quality standard

Question 73

At the beginning of the year, Jim Jackson initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$\begin{array}{lrr}&\underline{\text { Preceding Year }} &\underline{\text { Current Year}}\\\text { Sales } & \$ 2,400,000 & \$ 2,000,000 \\\text { Scrap } & 40,000 & 30,000 \\\text { Rework } & 100,000 & 70,000 \\\text { Product inspection } & 12,000 & 18,000 \\\text { Quality training } & 4,000 & 5,000 \\\text { Material inspections } & 8,000 & 13,000 \\\text { Product warranty } & 80,000 & 50,000\end{array}$


-Refer to the figure.For the current year,what percentage of sales are internal failure costs?

A)2.50%
B)5.00%
C)7.50%
D)9.30%

Question 74

Which of the following is an example of a decision-making context when using quality cost information?

A)strategic costing analysis
B)flexible budget analysis
C)cost-volume-profit analysis
D)volume production analysis

Question 75

In activity-based management,which of the following quality costs would be considered value-added?

A)internal failure
B)appraisal
C)external failure
D)supplier certification

Question 76

The following information pertains to Harrison Corp.for the current year: $\begin{array}{lr}\text { Sales } & \$ 3,000,000 \\\text { Internal failure costs } & 375,000 \\\text { External failure costs } & 150,000 \\\text { Appraisal costs } & 105,000 \\\text { Prevention costs } & 75,000 \\\text { Cost of goods sold } & 1,125,000\end{array}$
What percentage of sales are quality costs?

A)2.5%
B)6.0%
C)15.0%
D)23.5%

Question 77

At the beginning of the year, Jim Jackson initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$\begin{array}{lrr}&\underline{\text { Preceding Year }} &\underline{\text { Current Year}}\\\text { Sales } & \$ 2,400,000 & \$ 2,000,000 \\\text { Scrap } & 40,000 & 30,000 \\\text { Rework } & 100,000 & 70,000 \\\text { Product inspection } & 12,000 & 18,000 \\\text { Quality training } & 4,000 & 5,000 \\\text { Material inspections } & 8,000 & 13,000 \\\text { Product warranty } & 80,000 & 50,000\end{array}$


-Refer to the figure.For the current year,what percentage of sales are external failure costs?

A)2.50%
B)5.00%
C)7.50%
D)9.30%

Question 78

What does the total quality approach do?

A)It sets a robust zero-defect standard.
B)It allows a certain number of defective products.
C)It provides no encouragement for continuous improvement.
D)It sets a currently attainable standard.

Question 79

The following information pertains to Bull Company for the current year:
$\begin{array}{lr}\text { Sales } & \$ 1,000,000 \\\text { Internal failure costs } & 125,000 \\\text { External failure costs } & 50,000 \\\text { Appraisal costs } & 35,000 \\\text { Prevention costs } & 25,000 \\\text { Cost of goods sold } & 375,000\end{array}$

-Refer to the figure.What percentage of sales are quality costs?

A)2.5%
B)6.0%
C)15.0%
D)23.5%

Question 80

At the beginning of the year, Jim Jackson initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
$\begin{array}{lrr}&\underline{\text { Preceding Year }} &\underline{\text { Current Year}}\\\text { Sales } & \$ 2,400,000 & \$ 2,000,000 \\\text { Scrap } & 40,000 & 30,000 \\\text { Rework } & 100,000 & 70,000 \\\text { Product inspection } & 12,000 & 18,000 \\\text { Quality training } & 4,000 & 5,000 \\\text { Material inspections } & 8,000 & 13,000 \\\text { Product warranty } & 80,000 & 50,000\end{array}$


-Refer to the figure.For the current year,what percentage of sales are prevention costs?

A)0.25%
B)1.80%
C)2.50%
D)9.30%