Exam 14: Quality and Environmental Cost Management

Which of the following is a correct meaning(s)for the term zero defects?

The costs of processes that produce, market, deliver, and dispose of products are called:

Quality cost performance reports contain two essential elements: actual and expected outcomes.

An environmental benefits report would NOT contain

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. Then the hidden external failure costs are estimated to be

Using the abbreviations listed below, indicate for each of the costs whether the cost should be classified as: = Prevention D= Detection = Internal Failure = External Failure = none of the above 1. Cleaning up contaminated soil 2. Designing processes 3. Recycling scrap 4. Auditing environmental activities 5. Testing for contamination 6. Losing a lake for recreational use 7. Measuring contamination levels 8. Recycling products 9. Maintaining pollution equipment 10. Evaluating and selecting suppliers

Downtime attributed to quality problems is a(n)

The __________ report is used to evaluate budgeted quality costs goals.

A __________ report lists quality costs for each product within four quality cost categories.

The following information pertains to Stanislaus Corporation for the current year: Designing processes for environment \ 250,000 Testing for contamination \ 200,000 Cleaning up soil after contamination \ 1,500,000 Operating pollution control equipment \ 400,000 Measuring contamination levels \ 250,000 Total Operating Costs \ 15,000,000 Environmental External Failure costs amount to what percentage of total operating costs?

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: Freceding Year Current Year Sales \ 2,000,000 \ 2,000,000 Quality training 2,000 3,000 Packaging inspections 5,000 8,000 Downtime 40,000 30,000 Reinspection 80,000 50,000 Product inspection 10,000 20,000 Product liability 70.000 55,000 For the current year, prevention costs are what percentage of sales?

The assignment of private and societal costs to products is referred to as:

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, internal failure costs are what percentage of operating costs?

An example of a prevention cost is

When defining environmental costs, damage is defined as

At the beginning of the year, Devonshire 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 \ 2,400,000 \ 2,400,000 Quality training 30,000 48,000 Material inspections 7,000 8,000 Scrap 48,000 30,000 Rework 60,000 48,000 Product inspection 60,000 12,000 Product warranty 10,000 24,000

The following information pertains to Molotov, Inc., for the current year: Sales \ 20,000,000 Internal failure costs 600,000 External failure costs 400,000 Appraisal costs 250,000 Prevention costs 100,000 Cost of goods sold 10,000,000 Quality costs are what percentage of sales?

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, detection costs are what percentage of operating costs?

Quality experts indicate that optimal quality costs should be:

If costs of quality were evaluated accurately, they would range in the 2 to 4 percent of sales range.