Exam 14: Quality and Environmental Cost Management

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, internal failure costs are what percentage of operating costs?

The method that uses customer surveys and interviews by sales personnel to estimate future profit losses.

The environmental financial statement compares benefits produced with environmental costs within a period.

If management is reviewing a multiple-period trend graph that shows individual quality cost categories, what might they expect to see?

Which of the following is NOT an internal failure activity?

An example of additional revenue that might result from environmental activities is

As part of its environmental cost reporting system, Crimson Company tracks its total environmental costs. Consider the cost and sales data given: Total Year Environmental Costs Sales Revenue Operating Costs 2018 \ 1,750,000 \ 11,250,000 \ 5,000,000 2019 \ 1,125,000 \ 13,725,000 \ 7,000,000 What is the change in environmental costs from 2018 to 2019 as a percentage of operating costs of 2018? (Round to two decimal places.)

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: Freceding Year Current Year Sales \ 3,000,000 \ 3,000,000 Quality training 3,000 4,500 Material inspections 7,500 12,000 Scrap 60,000 45,000 Rework 120,000 75,000 Product inspection 15,000 30,000 Product warranty 105,000 82,500 As a result of quality improvements, profits have increased by

A graph that plots quality costs against time is the

Managers need quality cost information for which decisions?

Environmental costs involves the damage to the environment by inefficient use of materials and energy.

The measure of how well a product meets its requirements or specifications is called:

At the beginning of the year, Mike Gioulis 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 \ 2,000,000 Scrap 40,000 30,000 Rework 100,000 70,000 Product inspection 12,000 18,000 Quality training 4,000 5,000 Material inspections 8,000 13,000 As a result of quality improvements, profits have increased by

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, appraisal costs are what percentage of sales?

Even under a zero-defects approach to quality, what types of quality costs will still remain?

In-process inspection is a(n)

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, internal failure costs are what percentage of sales?

Using the abbreviations listed below, indicate for each of the costs whether the cost should be classified as: = Prevention = Appraisal = Internal Failure = External Failure = none of the above 1. Cost of recalling defective products 2. Design reviews 3. Downtime due to defects 4. Field testing 5. Inspection of work in process 6. Lost sales due to poor product performance 7. Process acceptance 8. Quality training programs 9. Scrap 10. Supplier evaluations

Which of the following is true about quality cost performance reports?

In activity-based management, which quality cost would NOT be considered value-added?