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.For the current year,what percentage of sales are prevention costs?

A) 0.25% B) 1.80% C) 2.50% D) 9.30% A) 0.25% B) 1.80% C) 2.50% D) 9.30%

As part of its environmental cost reporting system, Jesse Company tracks its total environmental costs. Consider the cost and sales data given: $\begin{array}{rrrr} \text { Year}&\text { Total Environmental Costs }&\text { Sales Revenue }&\text { Operating Costs }\\ \hline20 X 1 & \$ 7,500,000 & \$ 62,500,000 & \$ 50,000,000 \\ 20 X 2 & 6,250,000 & 62,500,000 & \$ 50,000,000 \\ 20 X 3 & 5,500,000 & 68,750,000 & \$ 50,000,000 \\ 20 X 4 & 4.812 .500 & 68.750,000 & \$ 50,000,000 \end{array}$ -Refer to the figure.What are the environmental costs as a percentage of sales for 20X3?

A) 8% B) 12.5% C) 72.73% D) 125% A) 8% B) 12.5% C) 72.73% D) 125%

At the beginning of the year, Andrew Company initiated an environmental cost reduction program. To help assess the impact of the environmental cost reduction improvement program, the following data were collected for the current and preceding year: $\begin{array}{lrr} & \underline{\text {Preceding Year}}& \underline{\text {Current Year}}\\ \text { Operating costs } & \$ 2,400,000 & \$ 2,400,000 \\ \text { Training employees } & 30,000 & 48,000 \\ \text { Inspecting processes } & 7,000 & 8,000 \\ \text { Operating pollution control equipment } & 32,000 & 50,000 \\ \text { Maintaining pollution equipment } & 60,000 & 28,000 \\ \text { Developing environmental performance measures } & 10,000 & 12,000 \\ \text { Cleaning up lake } & 36,000 & 24,000 \end{array}$ -Refer to the figure.For the current year,what percentage of operating costs are internal failure?

A) 1.25% B) 2.00% C) 3.25% D) 4.25% A) 1.25% B) 2.00% C) 3.25% D) 4.25%

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 pollution control cost per unit of Product X2?

A) $0.0224 B) $0.0560 C) $0.0896 D) $0.2240 A) $0.0224 B) $0.0560 C) $0.0896 D) $0.2240

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 energy usage cost per unit of Product X2?

A) $0.032 B) $0.064 C) $0.096 D) $0.160 A) $0.032 B) $0.064 C) $0.096 D) $0.160

As part of its environmental cost reporting system, Jesse Company tracks its total environmental costs. Consider the cost and sales data given: $\begin{array}{rrrr} \text { Year}&\text { Total Environmental Costs }&\text { Sales Revenue }&\text { Operating Costs }\\ \hline20 X 1 & \$ 7,500,000 & \$ 62,500,000 & \$ 50,000,000 \\ 20 X 2 & 6,250,000 & 62,500,000 & \$ 50,000,000 \\ 20 X 3 & 5,500,000 & 68,750,000 & \$ 50,000,000 \\ 20 X 4 & 4.812 .500 & 68.750,000 & \$ 50,000,000 \end{array}$ -Refer to the figure.What are the environmental costs as a percentage of sales for 20X1?

A) 8.33% B) 12% C) 15% D) 80% A) 8.33% B) 12% C) 15% D) 80%

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

The Answer of A = Appraisal and N = None is...

The following information pertains to Taft, Inc., for the current year: $\begin{array}{lr} \text { Sales } & \$ 20,000,000 \\ \text { Internal failure costs } & 600,000 \\ \text { External failure costs } & 400,000 \\ \text { Appraisal costs } & 250,000 \\ \text { Prevention costs } & 100,000 \\ \text { Cost of goods sold } & 10,000,000 \end{array}$ -Refer to the figure.Quality costs are what percentage of sales?

A) 3.00% B) 5.00% C) 6.25% D) 6.75% A) 3.00% B) 5.00% C) 6.25% D) 6.75%

Exam 16: Quality and Environmental Cost Management

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: 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 Product warranty 80,000 50,000 -Refer to the figure.For the current year,what percentage of sales are prevention costs?

(Multiple Choice)

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(86)

Question 41

As part of its environmental cost reporting system, Jesse Company tracks its total environmental costs. Consider the cost and sales data given: Year Total Environmental Costs Sales Revenue Operating Costs 20X1 \ 7,500,000 \ 62,500,000 \ 50,000,000 20X2 6,250,000 62,500,000 \ 50,000,000 20X3 5,500,000 68,750,000 \ 50,000,000 20X4 4.812.500 68.750,000 \ 50,000,000 -Refer to the figure.What are the environmental costs as a percentage of sales for 20X3?

(Multiple Choice)

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Question 42

What are observable quality costs?

(Multiple Choice)

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Question 43

What is a characteristic of a long-range quality report?

(Multiple Choice)

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Question 44

Which of the following is an example of a quality performance report?

(Multiple Choice)

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Question 45

Using the abbreviations listed below,indicate for each of the costs whether the cost should be classified as:

Cleaning up oil spills

D = Detection

Verifying supplier environmental performance

E = External Failure

Cleaning up a polluted lake

N = None of these

Correct Answer:

Verified

Cleaning up oil spills

Verifying supplier environmental performance

Cleaning up a polluted lake

Carrying out environmental studies

Inspecting products and processes

(Matching)

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(87)

Question 46

At the beginning of the year, Andrew Company initiated an environmental cost reduction program. To help assess the impact of the environmental cost reduction improvement program, the following data were collected for the current and preceding 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 Developing environmental performance measures 10,000 12,000 Cleaning up lake 36,000 24,000 -Refer to the figure.For the current year,what percentage of operating costs are internal failure?

(Multiple Choice)

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(82)

Question 47

At the beginning of the year,Paris,Inc.,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: Sales \ 4,000,000 \ 4,000,000 Quality circles 18,000 20,000 Packaging inspections 40,000 64,000 Scrap 200,000 180,000 Lost sales 360,000 320,000 Downtime 250,000 240,000 Product inspection 80,000 80,000 a.Compute each category of quality costs as a percentage of sales for each year. Prevention costs Appraisal costs Internal failure costs External failure costs b.How much has profit increased as a result of quality improvements? c.If quality costs can be reduced to 2.5 percent of sales,how much additional profit would result?

(Essay)

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Question 48

In activity-based management,which of the following quality costs would be considered value-added?

(Multiple Choice)

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Question 49

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: Kilograms produced 400,000 1,000,000 Packaging materials (kilograms) 120,000 60,000 Energy usage (kilowatt hours) 40,000 20,000 Toxic releases (kilograms into air) 100,000 20,000 Pollution control (machine hours) 16,000 4,000 Costs of activities: Using packaging materials \ 360,000 Using energy 96,000 Releasing toxins (fines) 48,000 Operating pollution control equipment 112,000 -Refer to the figure.What is the pollution control cost per unit of Product X2?

(Multiple Choice)

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Question 50

In activity-based management,which of the following quality costs would be considered value-added?

(Multiple Choice)

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Question 51

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: Kilograms produced 400,000 1,000,000 Packaging materials (kilograms) 120,000 60,000 Energy usage (kilowatt hours) 40,000 20,000 Toxic releases (kilograms into air) 100,000 20,000 Pollution control (machine hours) 16,000 4,000 Costs of activities: Using packaging materials \ 360,000 Using energy 96,000 Releasing toxins (fines) 48,000 Operating pollution control equipment 112,000 -Refer to the figure.What is the energy usage cost per unit of Product X2?

(Multiple Choice)

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Question 52

At what point are the lowest environmental costs attainable?

(Multiple Choice)

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Question 53

According to quality experts,what figure should total quality costs?

(Multiple Choice)

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Question 54

Which of the following is an external failure activity?

(Multiple Choice)

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Question 55

As part of its environmental cost reporting system, Jesse Company tracks its total environmental costs. Consider the cost and sales data given: Year Total Environmental Costs Sales Revenue Operating Costs 20X1 \ 7,500,000 \ 62,500,000 \ 50,000,000 20X2 6,250,000 62,500,000 \ 50,000,000 20X3 5,500,000 68,750,000 \ 50,000,000 20X4 4.812.500 68.750,000 \ 50,000,000 -Refer to the figure.What are the environmental costs as a percentage of sales for 20X1?

(Multiple Choice)

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Question 56

Which of the following is a prevention activity?

(Multiple Choice)

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Question 57

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 $500,000.What would be the estimated total external failure costs?

(Multiple Choice)

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(77)

Question 58

Using the abbreviations listed below,indicate for each of the costs whether the cost should be classified as:

Reinspection after defect is corrected

A = Appraisal

Warranty costs

N = None of these

Quality circles

P = Prevention

Correct Answer:

Verified

Reinspection after defect is corrected

Warranty costs

Quality circles

Process acceptance

Supplier evaluations

(Matching)

4.9/5

(87)

Question 59

The following information pertains to Taft, 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 -Refer to the figure.Quality costs are what percentage of sales?

(Multiple Choice)

4.8/5

(70)

Question 60

What are observable quality costs?

What is a characteristic of a long-range quality report?

Which of the following is an example of a quality performance report?

In activity-based management,which of the following quality costs would be considered value-added?

In activity-based management,which of the following quality costs would be considered value-added?

At what point are the lowest environmental costs attainable?

According to quality experts,what figure should total quality costs?

Which of the following is an external failure activity?

Which of the following is a prevention activity?

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 $500,000.What would be the estimated total external failure costs?

The following information pertains to Taft, 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 -Refer to the figure.Quality costs are what percentage of sales?

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

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