Question 1

What is the term for a measure of how well a product meets its requirements or specifications?

Accepted Answer

A) quality of conformance 
B) quality of design 
C) service quality 
D) Taguchi quality loss function 
A) quality of conformance 
B) quality of design 
C) service quality 
D) Taguchi quality loss function A

Question 2

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

Accepted Answer

Environmental costs are incurred because poor environmental quality exists or may exist.Environmental costs are associated with the creation,detection,remediation,and prevention of environmental damages.Damages can be defined as either direct degradation of the environment,such as the emission of a solid,liquid,or gas into the environment,or the indirect degradation of the environment.Indirect degradation can include the unnecessary usage of materials and energy.The various categories of environmental costs are: -Environmental detection costs-costs of activities executed to determine if products, processes, or other activities are in compliance with environmental standards.

-Examples would include inspecting products/processes, testing for contamination, measuring contamination levels.

-Environmental internal failure costs-costs of activities performed to eliminate and manage contaminants or waste once produced. Examples would include operation of pollution control equipment, treating/disposing of toxic waste, recycling scrap.

-Environmental external failure costs-costs of activities performed once contaminants or waste has been discharged into the environment. Could be realized, or incurred and paid for by the organization, or unrealized/societal costs caused by the firm but paid for by parties outside the firm. Examples would include clean-up of a polluted lake, oil spill, or contaminated soil. Indirect examples would include receiving medical care because of pollution, losing a lake for recreational use due to pollution or contamination, or damaged ecosystems from solid waste disposal.

Question 3

As preventive and appraisal costs increase,how will internal and external failure costs likely respond?

Accepted Answer

A) They will decrease. 
B) They will increase. 
C) They will remain the same. 
D) They will vary with no relation to preventive and appraisal costs. 
A) They will decrease. 
B) They will increase. 
C) They will remain the same. 
D) They will vary with no relation to preventive and appraisal costs. A

Question 4

What assumes that the total failure cost is some multiplier of measured failure costs?

Accepted Answer

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

Question 5

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.What would be the estimated hidden external failure costs?

Accepted Answer

A) $133,334 
B) $400,000 
C) $800,000 
D) $1,200,000 
A) $133,334 
B) $400,000 
C) $800,000 
D) $1,200,000

Question 6

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

Accepted Answer

A) number of billing cycles 
B) number of defects per unit 
C) number of contracts 
D) number of employees 
A) number of billing cycles 
B) number of defects per unit 
C) number of contracts 
D) number of employees

Question 7

Hanna Company produces a number of chemical products, two of which are Product X1 and Product X2. The controller and environmental manager have identified the following environmental activities and costs associated with the two products:
$\begin{array}{lr}
 &\underline{\text {Product XI}}& \underline{\text {Product X2}}\
\text { Kilograms produced } & 400,000 & 1,000,000 \
\text { Packaging materials (kilograms) } & 120,000 & 60,000 \
\text { Energy usage (kilowatt hours) } & 40,000 & 20,000 \
\text { Toxic releases (kilograms into air) } & 100,000 & 20,000 \
\text { Pollution control (machine hours) } & 16,000 & 4,000\
\
\text { Costs of activities: }\
\text { Using packaging materials } & \$ 360,000 \
\text { Using energy } & 96,000 \
\text { Releasing toxins (fines) } & 48,000 \
\text { Operating pollution control equipment } & 112,000
\end{array}$
-Refer to the figure.What is the fines cost per unit for toxic releases of Product X1?

Accepted Answer

A) $0.008 
B) $0.040 
C) $0.080 
D) $0.100 
A) $0.008 
B) $0.040 
C) $0.080 
D) $0.100

Question 8

What type of cost are quality training programs 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 9

Match between columns
                        Premises: Product acceptance
Reinspection after defect is corrected
Packaging inspections
Returns resulting from poor quality
Supplier evaluations
Rework costs
Warranty costs
Process acceptance
Quality audits
Quality circles

Accepted Answer

The Answer of P = Prevention and E = External is...

Question 10

Taylor 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:
$\begin{array}{lr}
 &\underline{\text {Product AI}}& \underline{\text {Product A2}}\
\text { Kilograms produced } & 200,000 & 500,000 \
\text { Packaging materials (kilograms) } & 60,000 & 30,000 \
\text { Energy usage (kilowatt hours) } & 20,000 & 10,000 \
\text { Toxic releases (kilograms into air) } & 50,000 & 10,000 \
\text { Pollution control (machine hours) } & 8,000 & 2,000\
\
\text { Costs of activities: }\
\text { Using packaging materials } & \$ 90,000 \
\text { Using energy } & 24,000 \
\text { Releasing toxins (fines) } & 12,000 \
\text { Operating pollution control equipment } & 28,000
\end{array}$
-Refer to the figure.What is the pollution control cost per unit of Product A2?

Accepted Answer

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

Question 11

What type of cost are the costs of a consumer complaint department?

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 12

What is the term for costs incurred because products or services fail to meet requirements after delivery to customers?

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 13

What type of cost is an in-process inspection?

Accepted Answer

A) an external failure cost 
B) an internal failure cost 
C) an appraisal cost 
D) a prevention cost 
A) an external failure cost 
B) an internal failure cost 
C) an appraisal cost 
D) a prevention cost

Question 14

What type of cost are product recalls?

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

What is characteristic of the costs according to the robust quality view?

Accepted Answer

A) Control costs increase without limits. 
B) Control costs increase as the robust state approaches. 
C) Failure costs can be driven to zero. 
D) Failure costs are at a maximum. 
A) Control costs increase without limits. 
B) Control costs increase as the robust state approaches. 
C) Failure costs can be driven to zero. 
D) Failure costs are at a maximum.

Question 16

What is the term for costs incurred to determine whether products and services are conforming to requirements?

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 17

At the beginning of the year, John 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:
$$\begin{array} { l r r } 
& \text { Preceding Year } & \text { Current Year } \
\text { Sales } & \$ 2,000,000 & \$2,000,000 \
\text { Quality training } &2,000 & 3,000 \
\text { Material inspections } & 5,00 & 8,000 \
\text { Scrap } & 40,000 & 30,000 \
\text { Rework } & 80,000 & 50,000 \
\text { Product inspection } & 10,000 &20,000 \
\text { Product waranty } &70,000 & 5,000
\end{array}$$
-Refer to the figure.For the current year,what percentage of sales are appraisal costs?

Accepted Answer

A) 0.14% 
B) 0.40% 
C) 1.00% 
D) 1.40% 
A) 0.14% 
B) 0.40% 
C) 1.00% 
D) 1.40%

Question 18

At the beginning of the year, Jim Jackson 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:
$\begin{array}{lrr}
&\underline{\text { Preceding Year }} &
\underline{\text { Current Year}}\
\text { Sales } & \$ 2,400,000 & \$ 2,000,000 \
\text { Scrap } & 40,000 & 30,000 \
\text { Rework } & 100,000 & 70,000 \
\text { Product inspection } & 12,000 & 18,000 \
\text { Quality training } & 4,000 & 5,000 \
\text { Material inspections } & 8,000 & 13,000 \
\text { Product warranty } & 80,000 & 50,000
\end{array}$

-Refer to the figure.As a result of quality improvements,by how much have profits increased?

Accepted Answer

A) $58,000 
B) $186,000 
C) $244,000 
D) $400,000 
A) $58,000 
B) $186,000 
C) $244,000 
D) $400,000

Question 19

The following information pertains to Harrison Corp.for the current year: $\begin{array}{lr}
\text { Sales } & \$ 3,000,000 \
\text { Internal failure costs } & 375,000 \
\text { External failure costs } & 150,000 \
\text { Appraisal costs } & 105,000 \
\text { Prevention costs } & 75,000 \
\text { Cost of goods sold } & 1,125,000
\end{array}$
 What percentage of sales are quality costs?

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 20

At the beginning of the year, Grant 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:
$$\begin{array} { l r r } 
& \text { Preceding Year } & \text { Current Year } \
\text { Sales } & \$ 3,000,000 & \$ 3,000,000 \
\text { Quality training } & 3,000 & 4,500 \
\text { Material inspections } & 7,500 & 12,000 \
\text { Scrap } & 60,000 & 45,000 \
\text { Rework } & 120,000 & 75,000 \
\text { Product inspection } & 15,000 & 30,000 \
\text { Product waranty } & 105,000 & 82,500
\end{array}$$
-Refer to the figure.If quality costs had been reduced to 2.5 percent of sales in the current year,by how much would profits have increased?

Accepted Answer

A) $37,500 
B) $91,500 
C) $174,000 
D) $255,000 
A) $37,500 
B) $91,500 
C) $174,000 
D) $255,000

What is the term for a measure of how well a product meets its requirements or specifications?

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

As preventive and appraisal costs increase,how will internal and external failure costs likely respond?

What assumes that the total failure cost is some multiplier of measured failure costs?

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.What would be the estimated hidden external failure costs?

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

What type of cost are quality training programs classified as?

What type of cost are the costs of a consumer complaint department?

What is the term for costs incurred because products or services fail to meet requirements after delivery to customers?

What type of cost is an in-process inspection?

What type of cost are product recalls?

What is characteristic of the costs according to the robust quality view?

What is the term for costs incurred to determine whether products and services are conforming to requirements?

The following information pertains to Harrison Corp.for the current year: Sales \ 3,000,000 Internal failure costs 375,000 External failure costs 150,000 Appraisal costs 105,000 Prevention costs 75,000 Cost of goods sold 1,125,000 What percentage of sales are quality costs?

A: Basic Cost Management Concepts

B: Basic Cost Management Concepts

Cost Behaviour

Cost-Volume-Profit Analysis

Job-Order Costing Systems

Process Costing

Activity-Based Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Responsibility Accounting,performance Evaluation,and Transfer Pricing

Tactical Decision Making

Pricing and Profitability Analysis

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Lean Accounting and Productivity Measurement

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

Filters

Exam 16: Quality and Environmental Cost Management

What is the term for a measure of how well a product meets its requirements or specifications?

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

As preventive and appraisal costs increase,how will internal and external failure costs likely respond?

What assumes that the total failure cost is some multiplier of measured failure costs?

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.What would be the estimated hidden external failure costs?

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

What type of cost are quality training programs classified as?

What type of cost are the costs of a consumer complaint department?

What is the term for costs incurred because products or services fail to meet requirements after delivery to customers?

What type of cost is an in-process inspection?

What type of cost are product recalls?

What is characteristic of the costs according to the robust quality view?

What is the term for costs incurred to determine whether products and services are conforming to requirements?

The following information pertains to Harrison Corp.for the current year: Sales \ 3,000,000 Internal failure costs 375,000 External failure costs 150,000 Appraisal costs 105,000 Prevention costs 75,000 Cost of goods sold 1,125,000 What percentage of sales are quality costs?

A: Basic Cost Management Concepts

B: Basic Cost Management Concepts

Cost Behaviour

Cost-Volume-Profit Analysis

Job-Order Costing Systems

Process Costing

Activity-Based Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Responsibility Accounting,performance Evaluation,and Transfer Pricing

Tactical Decision Making

Pricing and Profitability Analysis

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Lean Accounting and Productivity Measurement

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

Filters