Question 1

Maintaining pollution equipment is considered a(n)

Accepted Answer

A) prevention activity. 
B) detection activity. 
C) internal failure activity. 
D) external failure activity. 
A) prevention activity. 
B) detection activity. 
C) internal failure activity. 
D) external failure activity.

Question 2

Continuous auditing of suppliers assures the commitment to continuous improvement by ISO 9000 certified companies.

Accepted Answer

A) True 
 B)False

Question 3

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: $\begin{array}{lrr}&\text { Froduct } A 1& \text { Product } A2\
\text { Pounds produced } & 200,000 & 500,000 \
\text { Packaging materials (pounds) } & 60,000 & 30,000 \
\text { Energy usage (kilowatt hours) } & 20,000 & 10,000 \
\text { Toxic releases (pounds into air) } & 50,000 & 10,000 \
\text { Pollution control (machine hours) } & 8,000 & 2,000\\
\text { Costs of activities: } & \
\text { Using packaging materials } & \$ 90,000 \
\text { Using energy } & 24,000 \
\text { Releasing toxins (fines) } & 12,000 \
\text { Operating pollution control equipment } & 28,000\
\end{array}$ What is the pollution control cost per unit of Product A2?

Accepted Answer

A) $0.1120 
B) $0.0280 
C) $0.0112 
D) $0.0448 
A) $0.1120 
B) $0.0280 
C) $0.0112 
D) $0.0448

Question 4

According to the robust view, the strategy for reducing quality costs is NOT based on which assumption?

Accepted Answer

A) For every failure there is a root cause. 
B) Causes are preventable. 
C) Prevention costs must be balanced with the benefits. 
D) Continually redirecting prevention efforts will lead to further improvements. 
A) For every failure there is a root cause. 
B) Causes are preventable. 
C) Prevention costs must be balanced with the benefits. 
D) Continually redirecting prevention efforts will lead to further improvements.

Question 5

Prevention costs are incurred to prevent poor quality in products or services being produced.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is true about interim quality standards?

Accepted Answer

A) They establish the long-run quality goals of a firm for a period of five to ten years. 
B) They overlook supplier quality to achieve zero-defects level. 
C) They consider product demand as the most important aspect to achieve target quality. 
D) They help managers to assess the progress made to achieve zero-defect level on a yearly basis. 
A) They establish the long-run quality goals of a firm for a period of five to ten years. 
B) They overlook supplier quality to achieve zero-defects level. 
C) They consider product demand as the most important aspect to achieve target quality. 
D) They help managers to assess the progress made to achieve zero-defect level on a yearly basis.

Question 7

An environmental financial statement would NOT contain information on

Accepted Answer

A) income sources. 
B) prevention costs. 
C) cost of goods sold. 
D) current savings. 
A) income sources. 
B) prevention costs. 
C) cost of goods sold. 
D) current savings.

Question 8

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: $\begin{array}{lrr}&\text { Froduct } A 1& \text { Product } A2\
\text { Pounds produced } & 200,000 & 500,000 \
\text { Packaging materials (pounds) } & 60,000 & 30,000 \
\text { Energy usage (kilowatt hours) } & 20,000 & 10,000 \
\text { Toxic releases (pounds into air) } & 50,000 & 10,000 \
\text { Pollution control (machine hours) } & 8,000 & 2,000\\
\text { Costs of activities: } & \
\text { Using packaging materials } & \$ 90,000 \
\text { Using energy } & 24,000 \
\text { Releasing toxins (fines) } & 12,000 \
\text { Operating pollution control equipment } & 28,000\
\end{array}$ What is the energy usage cost per unit of Product A2?

Accepted Answer

A) $0.048 
B) $0.032 
C) $0.016 
D) $0.080 
A) $0.048 
B) $0.032 
C) $0.016 
D) $0.080

Question 9

A quality product or service is one that meets or exceeds customer expectations.

Accepted Answer

A) True 
 B)False

Question 10

Quality training programs are classified as

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 11

ISO 9000 is a set of international quality standards which are adopted by companies.

Accepted Answer

A) True 
 B)False

Question 12

At the beginning of the year, Kowalski 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: $\begin{array}{lrr}&\text { Freceding Year }&\text { Current Year }\
\text { Sales } & \$ 3,000,000 & \$ 3,000,000 \
\text { Quality training } & 3,000 & 4,500 \
\text { Material inspections } & 7,500 & 12,000 \
\text { Scrap } & 60,000 & 45,000 \
\text { Rework } & 120,000 & 75,000 \
\text { Product inspection } & 15,000 & 30,000 \
\text { Product warranty } & 105,000 & 82,500
\end{array}$
For the current year, internal failure costs are what percentage of sales?

Accepted Answer

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

Question 13

Which of the following activity costs is classified as external failure costs?

Accepted Answer

A) Cost of obtaining ISO 14001 certification 
B) Cost of restoring land to its natural state 
C) Cost of verifying a supplier's environmental performance 
D) Cost of licensing facilities for producing contaminants 
A) Cost of obtaining ISO 14001 certification 
B) Cost of restoring land to its natural state 
C) Cost of verifying a supplier's environmental performance 
D) Cost of licensing facilities for producing contaminants

Question 14

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. $\begin{array}{rrr}&\text { Quality Costs as }\
\text { Year }& \text { OperatingCosts } & \text { Percent of OperatingCosts }\
2018 & \$ 3,000,000 & 25.0 \
2019 & 3,100,000 & 23.0 \
2020 & 3,200,000 & 21.0 \
2021 & 3,300,000 & 20.0
\end{array}$ What is the change in environmental costs from 2019 to 2020?

Accepted Answer

A) $41,000 
B) $37,000 
C) $12,000 
D) $672,000 
A) $41,000 
B) $37,000 
C) $12,000 
D) $672,000

Question 15

The long-range quality performance report compares actual with final quality costs.

Accepted Answer

A) True 
 B)False

Question 16

Maroone 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. $\begin{array}{rrr}&\text { Quality Costs as }\
\text { Year }& \text { OperatingCosts } & \text { Percent of OperatingCosts }\
2018 & \$ 4,000,000 & 24.0 \
2019 & 4,100,000 & 22.0 \
2020 & 4,200,000 & 20.0 \
2021 & 4,300,000 & 18.0
\end{array}$ What is the change in environmental costs from 2018 to 2019?

Accepted Answer

A) $58,000 
B) $66,000 
C) $774,000 
D) $840,000 
A) $58,000 
B) $66,000 
C) $774,000 
D) $840,000

Question 17

Costs caused by the firm but are incurred and paid for by parties outside the firm are called:

Accepted Answer

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

Question 18

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. $\begin{array}{rrr}&\text { Quality Costs as }\
\text { Year }& \text { OperatingCosts } & \text { Percent of OperatingCosts }\
2018 & \$ 3,000,000 & 25.0 \
2019 & 3,100,000 & 23.0 \
2020 & 3,200,000 & 21.0 \
2021 & 3,300,000 & 20.0
\end{array}$ What is the change in environmental costs from 2020 to 2021?

Accepted Answer

A) $12,000 
B) $37,000 
C) $41,000 
D) $672,000 
A) $12,000 
B) $37,000 
C) $41,000 
D) $672,000

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 average loss per unit?

Accepted Answer

A) $12.00 
B) $10.80 
C) $2.61 
D) $2.16 
A) $12.00 
B) $10.80 
C) $2.61 
D) $2.16

Question 20

Which of the following is NOT an example of a decision-making context when using quality cost information?

Accepted Answer

A) strategic pricing 
B) flexible budget analysis 
C) cost-volume-profit analysis 
D) none of the above 
A) strategic pricing 
B) flexible budget analysis 
C) cost-volume-profit analysis 
D) none of the above

Maintaining pollution equipment is considered a(n)

Continuous auditing of suppliers assures the commitment to continuous improvement by ISO 9000 certified companies.

According to the robust view, the strategy for reducing quality costs is NOT based on which assumption?

Prevention costs are incurred to prevent poor quality in products or services being produced.

Which of the following is true about interim quality standards?

An environmental financial statement would NOT contain information on

A quality product or service is one that meets or exceeds customer expectations.

Quality training programs are classified as

ISO 9000 is a set of international quality standards which are adopted by companies.

Which of the following activity costs is classified as external failure costs?

The long-range quality performance report compares actual with final quality costs.

Costs caused by the firm but are incurred and paid for by parties outside the firm are called:

Which of the following is NOT an example of a decision-making context when using quality cost information?

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

Maintaining pollution equipment is considered a(n)

Continuous auditing of suppliers assures the commitment to continuous improvement by ISO 9000 certified companies.

According to the robust view, the strategy for reducing quality costs is NOT based on which assumption?

Prevention costs are incurred to prevent poor quality in products or services being produced.

Which of the following is true about interim quality standards?

An environmental financial statement would NOT contain information on

A quality product or service is one that meets or exceeds customer expectations.

Quality training programs are classified as

ISO 9000 is a set of international quality standards which are adopted by companies.

Which of the following activity costs is classified as external failure costs?

The long-range quality performance report compares actual with final quality costs.

Costs caused by the firm but are incurred and paid for by parties outside the firm are called:

Which of the following is NOT an example of a decision-making context when using quality cost information?

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