Deck 4: Cost of Quality

Question 1

ISO 9000 standards were established to make sure that all consumer products incorporate certain safety features.

Answer 1

False

Question 2

Which of the following would be classified as an internal failure cost on a quality cost report?

A)Supplies used in testing and inspection.
B)Test and inspection of incoming materials.
C)Plant utilities in the inspection area.
D)Downtime caused by quality problems.

Answer 2

D

Question 3

Which of the following would be classified as an appraisal cost on a quality cost report?

A)Systems development.
B)Plant utilities in the inspection area.
C)Lost sales arising from a reputation for poor quality.
D)Audits of the effectiveness of the quality system.

Answer 3

B

Question 4

Quality of conformance refers to the extent to which a product offered by one company is similar to products offered by other companies.

Question 5

Which of the following would be classified as an internal failure cost on a quality cost report?

A)Cost of field servicing and handling complaints.
B)Debugging software errors.
C)Maintenance of test equipment.
D)Test and inspection of incoming materials.

Question 6

The cost of disposing of defective units would be classified as a(n):

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

Question 7

Fagin Company's quality cost report is to be based on the following data:
$\begin{array}{ll}\text { Debugging software errors.......................... } & \$ 95,000 \\\text { Quality engineering ............................... } & \$ 65,000 \\\text { Supervision of testing and inspection activities..... } & \$ 55,000\\\text { Product recalls.................................... } & \$ 83,000 \\\text { Cost of field servicing and handling complaints.... } & \$ 30,000\\\text { Downtime caused by quality problems ............... } & \$ 19,000 \\\text { Systems development.......................................... }&\$54,000\\ \text { Final product testing and inspection...................}&\$42,000\\\text { Net cost of scrap.................................................}&\$36,000\end{array}$


-What would be the total appraisal cost appearing on the quality cost report?

A)$216,000
B)$78,000
C)$150,000
D)$97,000

Question 8

What would be the total external failure cost appearing on the quality cost report?

A)$153,000
B)$26,000
C)$413,000
D)$69,000

Question 9

What would be the total internal failure cost appearing on the quality cost report?

A)$127,000
B)$26,000
C)$84,000
D)$150,000

Question 10

Which of the following would be classified as a prevention cost on a quality cost report?

A)Cost of field servicing and handling complaints.
B)Quality engineering.
C)Lost sales arising from a reputation for poor quality.
D)Supervision of testing and inspection activities.

Question 11

Fagin Company's quality cost report is to be based on the following data:
$\begin{array}{ll}\text { Debugging software errors.......................... } & \$ 95,000 \\\text { Quality engineering ............................... } & \$ 65,000 \\\text { Supervision of testing and inspection activities..... } & \$ 55,000\\\text { Product recalls.................................... } & \$ 83,000 \\\text { Cost of field servicing and handling complaints.... } & \$ 30,000\\\text { Downtime caused by quality problems ............... } & \$ 19,000 \\\text { Systems development.......................................... }&\$54,000\\ \text { Final product testing and inspection...................}&\$42,000\\\text { Net cost of scrap.................................................}&\$36,000\end{array}$


-What would be the total prevention cost appearing on the quality cost report?

A)$119,000
B)$84,000
C)$96,000
D)$120,000

Question 12

Which of the following would be classified as an appraisal cost on a quality cost report?

A)Quality circles.
B)Rework labor and overhead.
C)Downtime caused by quality problems.
D)Supervision of testing and inspection activities.

Question 13

Which of the following would be classified as an external failure cost on a quality cost report?

A)Debugging software errors.
B)Final product testing and inspection.
C)Depreciation of test equipment.
D)Liability arising from defective products.

Question 14

An increase in appraisal costs will usually result in an increase in:

A)prevention costs.
B)internal failure costs.
C)external failure costs.
D)opportunity costs.

Question 15

A quality cost report is usually compiled by the purchasing department to show the added costs of purchasing higher quality components.

Question 16

Which of the following would be classified as an external failure cost on a quality cost report?

A)Quality training.
B)Liability arising from defective products.
C)Test and inspection of incoming materials.
D)Quality engineering.

Question 17

What would be the total prevention cost appearing on the quality cost report?

A)$145,000
B)$75,000
C)$93,000
D)$76,000

Question 18

A quality cost incurred to detect individual units that do not conform to specifications is an example of a(n):

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

Question 19

What would be the total appraisal cost appearing on the quality cost report?

A)$92,000
B)$102,000
C)$184,000
D)$104,000

Question 20

Which of the following would be classified as a prevention cost on a quality cost report?

A)Warranty repairs and replacements.
B)Quality engineering.
C)Test and inspection of in-process goods.
D)Net cost of scrap.

Question 21

Fagin Company's quality cost report is to be based on the following data:
$\begin{array}{ll}\text { Debugging software errors.......................... } & \$ 95,000 \\\text { Quality engineering ............................... } & \$ 65,000 \\\text { Supervision of testing and inspection activities..... } & \$ 55,000\\\text { Product recalls.................................... } & \$ 83,000 \\\text { Cost of field servicing and handling complaints.... } & \$ 30,000\\\text { Downtime caused by quality problems ............... } & \$ 19,000 \\\text { Systems development.......................................... }&\$54,000\\ \text { Final product testing and inspection...................}&\$42,000\\\text { Net cost of scrap.................................................}&\$36,000\end{array}$


-What would be the total external failure cost appearing on the quality cost report?

A)$113,000
B)$263,000
C)$102,000
D)$479,000

Question 22

Harville Company's quality cost report is to be based on the following data:
Required:
Prepare a Quality Cost Report in good form with separate sections for prevention costs,appraisal costs,internal failure costs,and external failure costs.

Question 23

Fagin Company's quality cost report is to be based on the following data:
$\begin{array}{ll}\text { Debugging software errors.......................... } & \$ 95,000 \\\text { Quality engineering ............................... } & \$ 65,000 \\\text { Supervision of testing and inspection activities..... } & \$ 55,000\\\text { Product recalls.................................... } & \$ 83,000 \\\text { Cost of field servicing and handling complaints.... } & \$ 30,000\\\text { Downtime caused by quality problems ............... } & \$ 19,000 \\\text { Systems development.......................................... }&\$54,000\\ \text { Final product testing and inspection...................}&\$42,000\\\text { Net cost of scrap.................................................}&\$36,000\end{array}$


-What would be the total internal failure cost appearing on the quality cost report?

A)$150,000
B)$155,000
C)$178,000
D)$49,000

Question 24

Gabris Company's quality cost report is to be based on the following data:
Required:
Prepare a Quality Cost Report in good form with separate sections for prevention costs,appraisal costs,internal failure costs,and external failure costs.