Question 1

Cost-volume-profit analysis relies on analysis of fixed and variable costs.

Accepted Answer

A) True 
 B)False

Question 2

Canary Corporation reported the following information related to the past three 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. $\begin{array}{rrr}&&\text { Quality Costs as }\
\text { Year } &\text { Operating Costs } &\text { Percent of Operating Costs }\
2018 & \$ 2,000,000 & 14.0 \
2019 & 2,100,000 & 12.0 \
2020 & 2,200,000 & 10.0
\end{array}$ What is the change in environmental costs from 2018 to 2019?

Accepted Answer

A) A decrease of $28,000 
B) An increase of $28,000 
C) An increase of $100,000 
D) A decrease of $100,000 
A) A decrease of $28,000 
B) An increase of $28,000 
C) An increase of $100,000 
D) A decrease of $100,000

Question 3

Costs which exist because poor quality may or does exits are called __________ .

Accepted Answer

The answer of Costs which exist because poor quality may...

Question 4

A measure of how well requirements are met by a product is called __________ .

Accepted Answer

quality of

Question 5

The robust quality model

Accepted Answer

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

Question 6

Costs incurred because products or services fail to meet requirements after delivery to customers are called

Accepted Answer

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

Question 7

If a quality performance report compares the actual quality costs for the period to the budgeted quality costs for the period, that report is

Accepted Answer

A) a multiple-period trend report. 
B) a long-range standard report. 
C) an interim standard report. 
D) none of the above. 
A) a multiple-period trend report. 
B) a long-range standard report. 
C) an interim standard report. 
D) none of the above.

Question 8

The following information pertains to Longhorn Company for the current year: $$\begin{array} { l r } 
\text { Sales } & \$ 1,000,000 \
\text { Internal failure costs } & 125,000 \
\text { External failure costs } & 50,000 \
\text { Appraisal costs } & 35,000 \
\text { Prevention costs } & 25,000 \
\text { Cost of goods sold } & 375,000
\end{array}$$ Quality costs are what percentage of sales?

Accepted Answer

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

Question 9

At the beginning of the year, Marinov 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: $\begin{array}{lrr}&\text { Freceding Year }&\text { Current Year }\
\text { Sales } & \$ 2,000,000 & \$ 2,000,000 \
\text { Quality training } & 2,000 & 3,000 \
\text { Packaging inspections } & 5,000 & 8,000 \
\text { Downtime } & 40,000 & 30,000 \
\text { Reinspection } & 80,000 & 50,000 \
\text { Product inspection } & 10,000 & 20,000 \
\text { Product liability } & 70.000 & 55,000
\end{array}$ For the current year, external failure costs are what percentage of sales?

Accepted Answer

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

Question 10

Multiple methods of estimating hidden quality costs do NOT include the

Accepted Answer

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

Question 11

Define environmental costs and identify the four categories of environmental costs. Give an example of each category.

Accepted Answer

Environmental costs are incurred because

Question 12

As part of its environmental cost reporting system, McClaren Company tracks its total environmental costs. Consider the cost and sales data given: $\begin{array}{rrrr}
&\text { Total }\
\text { Year }& \text { Environmental Costs }& \text { Sales Revenue } & \text { Operating Costs }\
2018 & \$ 3,750,000 & \$ 31,250,000 & \$ 25,000,000 \
2019 & 3,125,000 & 31,250,000 & \$ 25,000,000 \
2020 & 2,750,000 & 39,375,000 & \$ 25,000,000 \
2021 & 2,406,250 & 39,375,000 & \$ 25,000,000
\end{array}$
What is the environmental costs as a percentage of sales for 2019?

Accepted Answer

A) 100% 
B) 10% 
C) 80% 
D) 1,000% 
A) 100% 
B) 10% 
C) 80% 
D) 1,000%

Question 13

The following information pertains to Bartolo Company for the current year: $\begin{array}{lr}
\text { Sales } & \$ 12,000,000 \
\text { Internal failure costs } & 400,000 \
\text { External failure costs } & 300,000 \
\text { Apprai sal costs } & 225,000 \
\text { Prevention costs } & 150,000 \
\text { Cost of goods sold } & 6,500,000
\end{array}$ 
Required:
Calculate by how much profits would increase if quality costs were reduced to 2.0 percent of sales.

Accepted Answer

($400,000 + $300,000

Question 14

Reinspection of reworked products is a(n)

Accepted Answer

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

Question 15

Which of the following is NOT an important outcome of reporting environmental costs?

Accepted Answer

A) the impact of environmental cost on firm profitability 
B) the relative amounts expensed in each category of expenses 
C) the budgeted environmental costs 
D) each expense category expressed as a percentage of total operating costs 
A) the impact of environmental cost on firm profitability 
B) the relative amounts expensed in each category of expenses 
C) the budgeted environmental costs 
D) each expense category expressed as a percentage of total operating costs

Question 16

Costs incurred and paid for by the firm are called:

Accepted Answer

A) Unrealized internal failure costs 
B) Unrealized external failure costs 
C) Realized internal failure costs 
D) Realized external failure costs 
A) Unrealized internal failure costs 
B) Unrealized external failure costs 
C) Realized internal failure costs 
D) Realized external failure costs

Question 17

Phillips Screw Company produces screw fittings. It is determined that T = 1 inch in diameter. Specification limits allow a variation of plus or minus 0.5 inches. Products produced at values beyond the specification limits lose $15. A sample of five units produced showed the following values: $$\begin{array} { l c } 
\text { Unit Number } & \text { Actual Diameter (Y) } \
\text { Unit } 1 & 1.2 \
\text { Unit 2 } & 1.3 \
\text { Unit 3 } & 0.8 \
\text { Unit } 4 & 0.9 \
\text { Unit } 5 & 1.0
\end{array}$$ What is k, the constant, in the Taguchi loss function?

Accepted Answer

A) $60 
B) $2.5 
C) $5.2 
D) $0.5 
A) $60 
B) $2.5 
C) $5.2 
D) $0.5

Question 18

Costs incurred to determine whether products and services are conforming to requirements are called

Accepted Answer

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

Question 19

Phillips Screw Company produces screw fittings. It is determined that T = 1 inch in diameter. Specification limits allow a variation of plus or minus 0.5 inches. Products produced at values beyond the specification limits lose $15. A sample of five units produced showed the following values: $$\begin{array} { l c } 
\text { Unit Number } & \text { Actual Diameter (Y) } \
\text { Unit } 1 & 1.2 \
\text { Unit 2 } & 1.3 \
\text { Unit 3 } & 0.8 \
\text { Unit } 4 & 0.9 \
\text { Unit } 5 & 1.0
\end{array}$$ What is the cost of hidden loss for production of 50,000 units?

Accepted Answer

A) $34,722 
B) $90,000 
C) $108,000 
D) $300,000 
A) $34,722 
B) $90,000 
C) $108,000 
D) $300,000

Question 20

The predetermined amount of defective product that a company permits to be sold is called:

Accepted Answer

A) Zero defects 
B) Kaizen 
C) Acceptable quality level 
D) Taguchi quality loss function 
A) Zero defects 
B) Kaizen 
C) Acceptable quality level 
D) Taguchi quality loss function

Cost-volume-profit analysis relies on analysis of fixed and variable costs.

Costs which exist because poor quality may or does exits are called __________ .

A measure of how well requirements are met by a product is called __________ .

The robust quality model

Costs incurred because products or services fail to meet requirements after delivery to customers are called

If a quality performance report compares the actual quality costs for the period to the budgeted quality costs for the period, that report is

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 Quality costs are what percentage of sales?

Multiple methods of estimating hidden quality costs do NOT include the

Define environmental costs and identify the four categories of environmental costs. Give an example of each category.

Reinspection of reworked products is a(n)

Which of the following is NOT an important outcome of reporting environmental costs?

Costs incurred and paid for by the firm are called:

Costs incurred to determine whether products and services are conforming to requirements are called

The predetermined amount of defective product that a company permits to be sold is called:

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters

Exam 14: Quality and Environmental Cost Management

Cost-volume-profit analysis relies on analysis of fixed and variable costs.

Costs which exist because poor quality may or does exits are called __________ .

A measure of how well requirements are met by a product is called __________ .

The robust quality model

Costs incurred because products or services fail to meet requirements after delivery to customers are called

If a quality performance report compares the actual quality costs for the period to the budgeted quality costs for the period, that report is

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 Quality costs are what percentage of sales?

Multiple methods of estimating hidden quality costs do NOT include the

Define environmental costs and identify the four categories of environmental costs. Give an example of each category.

Reinspection of reworked products is a(n)

Which of the following is NOT an important outcome of reporting environmental costs?

Costs incurred and paid for by the firm are called:

Costs incurred to determine whether products and services are conforming to requirements are called

The predetermined amount of defective product that a company permits to be sold is called:

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters