Exam 14: Quality and Environmental Cost Management

As quality improves, savings can potentially be realized by reduced:

Azure Company uses the multiplier method to estimate hidden quality costs. The multiplier is determined to be 3, based on experience. Accounting records show that the measured external failure costs are $330,000. Which of the following is the total external failure cost?

Which of the following is an example of environmental prevention activities?

The following information pertains to Longhorn Company for the current year: Sales \ 1,000,000 Internal failure costs 125,000 External failure costs 50,000 Appraisal costs 35,000 Prevention costs 25,000 Cost of goods sold 375,000 If quality costs were reduced to 2.5 percent of sales, profits would increase by

The following information pertains to James Adams Corp. for the current year: Sales \ 3,125,000 Internal failure costs 450,000 External failure costs 180,000 Appraisal costs 126,000 Prevention costs 90,000 Cost of goods sold 1,350,000 Quality costs are what percentage of sales?

Carborundum Corporation reported the following operating costs and environmental quality costs for the past four years. Assume that all environmental quality costs are variable and that all changes in the quality cost ratios are due to an environmental cost reduction program. Quality Costs as Year OperatingCosts Percent of OperatingCosts 2018 \ 3,000,000 25.0 2019 3,100,000 23.0 2020 3,200,000 21.0 2021 3,300,000 20.0 What is the change in environmental costs from 2018 to 2019?

In a quality cost report, quality costs are grouped into categories and then each category of quality costs is expressed as a percentage of

The costs of a consumer complaint department are

At the beginning of the year, Nevermore, Inc., 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: Freceding Year Current Year Sales \ 2,000,000 \ 2,000,000 Quality circles 9,000 10,000 Packaging inspections 20,000 32,000 Scrap 100,000 90,000 Lost sales 180,000 160,000 Downtime 125,000 120,000 Product inspection 40,000 90,000 Required: a.Compute each category of quality costs as a percentage of sales for each year.Prevention costs Appraisal costs Internal failure costs External failure costs b.How much has profit increased as a result of quality improvements? c.If quality costs can be reduced to 2.0 percent of sales, how much additional profit would result?

Labor and overhead incurred for rework of defective products found by an inspector is a(n)

What does quality mean and how has improving quality increased firm value?

The decision making contexts related to quality cost information are strategic pricing and strategic analysis.

At the beginning of the year, Molybdenum Company initiated an environmental cost reduction program. To help assess the impact of the environmental cost reduction improvement program, the following data was collected for the current and preceding year: Freceding Year Current Year Operating costs \ 2,400,000 \ 2,400,000 Training employees 30,000 48,000 Inspecting processes 7,000 8,000 Operating pollution control equipment 32,000 50,000 Maintaining pollution equipment 60,000 28,000 Devel oping environmental performance measures 10,000 12,000 Cleaning up lake 36,000 24,000 For the current year, prevention costs are what percentage of operating costs?

Which of the following is an example of a physical measure of quality?

At the beginning of the year, Custom Choppers 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: Freceding Year Current Year Sales \ 5,000,000 \ 5,000,000 Quality training 22,500 25,000 Material inspections 50,000 80,000 Scrap 250,000 225,000 Product warranty 450,000 400,000 Rework 375,000 300,000 Product inspection 100,000 100,000 Required: a.Compute each category of quality costs as a percentage of sales for each year.Prevention costs Appraisal costs Internal failure costs External failure costs b.How much has profit increased as a result of quality improvements? c.If quality costs can be reduced to 2.5 percent of sales, how much additional profit would result?

At the beginning of the year, Lombardi Company initiated an environmental cost reduction program. To help assess the impact of the environmental cost reduction improvement program, the following data was collected for the current and preceding year: Freceding Year Current Year Operating costs \ 4,500,000 \ 4,500,000 Designing products 3,000 4,500 Auditing environmental activities 7,500 12,000 Recycling scrap 60,000 45,000 Disposing of toxic waste 120,000 75,000 Testing for contamination 15,000 30,000 Cleaning up oil spills 105,000 82,500 For the current year, prevention costs are what percentage of operating costs?

__________ cost information is used to evaluate overall performance of quality improvement programs.

The predetermined allowable amount of defective product allowed to be sold is called __________.

The zero-defects model claims that it is cost beneficial to reduce nonconforming units to zero.

Carbondioxide Chemical produces a number of chemical products, two of which are Product A1 and Product A2. The controller and environmental manager have identified the following environmental activities and costs associated with the two products: Froduct A1 Product A2 Pounds produced 200,000 500,000 Packaging materials (pounds) 60,000 30,000 Energy usage (kilowatt hours) 20,000 10,000 Toxic releases (pounds into air) 50,000 10,000 Pollution control (machine hours) 8,000 2,000 Costs of activities: Using packaging materials \ 90,000 Using energy 24,000 Releasing toxins (fines) 12,000 Operating pollution control equipment 28,000 What is the packing cost per unit of Product A1?