Exam 16: Quality and Environmental Cost Management

What type of information would be contained in an environmental financial statement?

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: 20\times1 20\times2 20\times3 20\times4 Reliability engineering \ 8,000 \ 10,000 \ 15,000 \ 25,000 Quality training 1,000 2,000 5,000 8,000 Packaging inspections 2,000 3,000 5,000 5,000 Product acceptance 12,000 10,000 9,000 7,000 Rework 30,000 25,000 18,000 12,000 Reinspection 75,000 65,000 48,000 29,000 Customer complaints 100,000 85,000 62,000 51,000 Warranty and repair 70,000 50,000 40,000 25,000 a.Prepare a multiple-year trend report for overall costs of quality. b.Prepare a multiple-year trend report for each category of quality costs. c.Graph the results.

What is the definition of the term "zero defects"?

In a quality cost report,quality costs are grouped into categories.Each category of quality costs is then expressed as a percentage of which of the following?

What are the dimensions of quality?

What is the term for a quality report that compares the current actual quality costs with short-run budgeted quality targets?

Which of the following is an example of a decision-making context when using quality cost information?

The following information pertains to Rudy Company for 2014: Sales \ 10,000,000 Internal failure costs 300,000 External failure costs 200,000 Appraisal costs 125,000 Prevention costs 50,000 Cost of goods sold 5,000,000 Calculate by how much profits would increase if quality costs were reduced to 2.5 percent of sales.

What is the term for the assignment of only private costs to individual products?

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: Preceding 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 waranty 105,000 82,500 -Refer to the figure.For the current year,what percentage of sales are external failure costs?

A company produces screw fittings. It is determined that T = 1 inch in diameter. Specification limits allow a variation of plus or minus 0.5 cm. Products produced at values beyond the specification limits lose $10. A sample of five units produced showed the following values: Unit Number Actual Diameter (Y) Unit 1 1.2 Unit 2 1.3 Unit 3 0.8 Unit 4 0.9 Unit 5 1.0 -Refer to the figure.What is the cost of hidden loss for production of 50,000 units?

What is the term for the costs of processes that produce,market,deliver,and dispose of products?

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 external failure costs?

At the beginning of the year, Grant 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 \ 3,000,000 \ 3,000,000 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 -Refer to the figure.For the current year,what percentage of operating costs are internal failure costs?

Which of the following is a method of estimating hidden quality costs?

What does the total quality approach do?

The following information pertains to Kanyon, Inc., for the current year: Sales \ 2,000,000 Internal failure costs 250,000 External failure costs 100,000 Appraisal costs 70,000 Prevention costs 50,000 Cost af goods sold 750,000 -Refer to the figure.If quality costs were reduced to 2.5 percent of sales,by how much would profits increase?

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 20X4?

Which of the following costs are caused by the firm but are incurred and paid for by parties outside the firm?

What is the term for the assignment of private and societal costs to products?