Question 1

Which of the following is considered a cost of quality?

Accepted Answer

A)  external failure costs 
B)  opportunity costs 
C)  sunk costs 
D)  contingent liabilities 
A)  external failure costs 
B)  opportunity costs 
C)  sunk costs 
D)  contingent liabilities

Question 2

Answer the following questions using the information below:
LaCrosse Products has a budget of $900,000 in 2015 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $80,000 in variable costs. The new method will require $40,000 in training costs and $100,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 150,000 units.
Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $50,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 3% of all completed items. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company's average external failures average 3% of units sold. The new proposal will reduce this rate by 50%. Assume all units produced are sold and there are no ending inventories.
-How much will appraisal costs change assuming the new prevention methods reduce material failures by 40% in the appraisal phase?

Accepted Answer

A)  $140,000 decrease 
B)  $60,000 increase 
C)  $50,000 decrease 
D)  $22,500 decrease 
A)  $140,000 decrease 
B)  $60,000 increase 
C)  $50,000 decrease 
D)  $22,500 decrease

Question 3

What are control charts and how can inferences be drawn from them?

Accepted Answer

A control chart is a graph of a series o

Question 4

Six Sigma emphasizes incremental rather than dramatic or disruptive innovation.

Accepted Answer

A) True 
 B)False

Question 5

Zenich Corp manufactures laptops.The waiting time is 60 minutes before the start of production and the manufacturing lead time is 150 minutes per laptop.What is its manufacturing cycle efficiency?

Accepted Answer

A)  40% 
B)  70% 
C)  60% 
D)  66.67% 
A)  40% 
B)  70% 
C)  60% 
D)  66.67%

Question 6

A quality improvement program is very costly to implement across a large corporation.Why do they do it? Explain.

Accepted Answer

A focus on quality within an organizatio

Question 7

Which of the following is an opportunity cost?

Accepted Answer

A)  lost sales 
B)  cost of production 
C)  marginal cost 
D)  cost of sales 
A)  lost sales 
B)  cost of production 
C)  marginal cost 
D)  cost of sales

Question 8

An important difference between financial measures of quality and nonfinancial measures of quality is that ________.

Accepted Answer

A)  financial measures of quality tend to be useful indicators of future long-term performance, while nonfinancial measures have more of a short-term focus 
B)  nonfinancial measures of quality tend to be useful indicators of future long-term performance, while financial measures of quality have more of a short-term focus 
C)  nonfinancial measures are generally too subjective to have any long-term value, while financial measures are too 
D)  nonfinancial measures are generally too subjective to have any short-term value, while financial measures are too 
A)  financial measures of quality tend to be useful indicators of future long-term performance, while nonfinancial measures have more of a short-term focus 
B)  nonfinancial measures of quality tend to be useful indicators of future long-term performance, while financial measures of quality have more of a short-term focus 
C)  nonfinancial measures are generally too subjective to have any long-term value, while financial measures are too 
D)  nonfinancial measures are generally too subjective to have any short-term value, while financial measures are too

Question 9

Manufacturing cycle time is ________.

Accepted Answer

A)  the amount of time it takes from when an order is ready to start on the production line to when the product or service is delivered to the customer 
B)  the amount of time it takes to deliver a completed order to a customer plus its waiting time 
C)  the amount of time it takes from when a customer places an order for a product or requests a service to when the product or service is delivered to the customer 
D)  the amount of time it takes from when an order is ready to start on the production line to when it becomes a finished good plus its waiting time 
A)  the amount of time it takes from when an order is ready to start on the production line to when the product or service is delivered to the customer 
B)  the amount of time it takes to deliver a completed order to a customer plus its waiting time 
C)  the amount of time it takes from when a customer places an order for a product or requests a service to when the product or service is delivered to the customer 
D)  the amount of time it takes from when an order is ready to start on the production line to when it becomes a finished good plus its waiting time

Question 10

Costs of Quality (COQ)are classified into four categories: prevention costs,appraisal costs,opportunity costs,and sales costs.

Accepted Answer

A) True 
 B)False

Question 11

ISO 9000 developed by the International Organization for Standardization is a set of five international standards for quality management.

Accepted Answer

A) True 
 B)False

Question 12

Managers identify the relevant costs and benefits for each solution by focusing on ________.

Accepted Answer

A)  the alternative solution that will derive maximum customer satisfaction 
B)  how total costs and total revenues will change under each alternative solution 
C)  how the employees of a company would be able to implement a change 
D)  how long it will take for the improved program to be fully functional 
A)  the alternative solution that will derive maximum customer satisfaction 
B)  how total costs and total revenues will change under each alternative solution 
C)  how the employees of a company would be able to implement a change 
D)  how long it will take for the improved program to be fully functional

Question 13

A control chart identifies potential causes of failures or defects.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is an advantage of nonfinancial measures of quality?

Accepted Answer

A)  They help managers aggregate costs to evaluate the tradeoffs of incurring prevention costs and appraisal costs to eliminate internal and external failure costs. 
B)  They detect and provide immediate short-run feedback on whether quality-improvement efforts are succeeding. 
C)  They focus managers' attention on how poor quality affects operating income. 
D)  They direct attention to financial processes that help managers identify the precise problem areas that need improvement. 
A)  They help managers aggregate costs to evaluate the tradeoffs of incurring prevention costs and appraisal costs to eliminate internal and external failure costs. 
B)  They detect and provide immediate short-run feedback on whether quality-improvement efforts are succeeding. 
C)  They focus managers' attention on how poor quality affects operating income. 
D)  They direct attention to financial processes that help managers identify the precise problem areas that need improvement.

Question 15

Which of the following is true of ISO 9000?

Accepted Answer

A)  It is a quality management system comprising different process improvement such as six sigma and lean manufacturing. 
B)  It is mandatory for all listed companies in US to get ISO certified. 
C)  It helps companies monitor, document, and certify the elements of their production processes that lead to quality. 
D)  It is a disciplined, data-driven, and statistical approach to improve the quality of products or services by identifying and removing the causes of defects. 
A)  It is a quality management system comprising different process improvement such as six sigma and lean manufacturing. 
B)  It is mandatory for all listed companies in US to get ISO certified. 
C)  It helps companies monitor, document, and certify the elements of their production processes that lead to quality. 
D)  It is a disciplined, data-driven, and statistical approach to improve the quality of products or services by identifying and removing the causes of defects.

Question 16

Which of the following is an advantage of COQ measures?

Accepted Answer

A)  They help managers aggregate costs to evaluate the tradeoffs of incurring prevention costs and appraisal costs to eliminate internal and external failure costs. 
B)  They detect and provide immediate short-run feedback on whether quality-improvement efforts are succeeding. 
C)  They forecast customer satisfaction and employee satisfaction, which are useful indicators of long-run performance. 
D)  They direct attention to financial processes that help managers identify the precise problem areas that need improvement. 
A)  They help managers aggregate costs to evaluate the tradeoffs of incurring prevention costs and appraisal costs to eliminate internal and external failure costs. 
B)  They detect and provide immediate short-run feedback on whether quality-improvement efforts are succeeding. 
C)  They forecast customer satisfaction and employee satisfaction, which are useful indicators of long-run performance. 
D)  They direct attention to financial processes that help managers identify the precise problem areas that need improvement.

Question 17

Ventaz Corp manufactures keyboards.The manufacturing cycle efficiency is 40%.What is its manufacturing time for value added if the manufacturing lead time is 120 minutes per keyboard?

Accepted Answer

A)  38.50 minutes 
B)  60.00 minutes 
C)  48.00 minutes 
D)  54.00 minutes 
A)  38.50 minutes 
B)  60.00 minutes 
C)  48.00 minutes 
D)  54.00 minutes

Question 18

Answer the following questions using the information below:
Monticello Corp manufactures expensive tables. Its varnishing department is fully automated and requires substantial inspection to keep the machines operating properly. An improperly varnished table is very expensive to correct. Inspection hours for the 5,000 tables varnished in September totaled 1,500 hours by 8 employees. Eight quarts of varnish were used, on average, for each table. The standard amount of varnish per table is nine quarts. The cost of inspection for September was equal to the budgeted amount of $40,000.
-What is the inspection cost per unit?

Accepted Answer

A)  $30.40 
B)  $8.00 
C)  $9.00 
D)  $4,750 
A)  $30.40 
B)  $8.00 
C)  $9.00 
D)  $4,750

Question 19

A liability claim is an example of ________.

Accepted Answer

A)  prevention costs 
B)  appraisal costs 
C)  internal failure costs 
D)  external failure costs 
A)  prevention costs 
B)  appraisal costs 
C)  internal failure costs 
D)  external failure costs

Question 20

Distribution of questionnaires to customers regarding product quality and improving the product on certain key areas based on the inferences drawn from the questionnaires is an example of a nonfinancial measure of quality.

Accepted Answer

A) True 
 B)False

Exam 19: Balanced Scorecard: Quality and Time

Which of the following is considered a cost of quality?

What are control charts and how can inferences be drawn from them?

Six Sigma emphasizes incremental rather than dramatic or disruptive innovation.

Zenich Corp manufactures laptops.The waiting time is 60 minutes before the start of production and the manufacturing lead time is 150 minutes per laptop.What is its manufacturing cycle efficiency?

A quality improvement program is very costly to implement across a large corporation.Why do they do it? Explain.

Which of the following is an opportunity cost?

An important difference between financial measures of quality and nonfinancial measures of quality is that ________.

Manufacturing cycle time is ________.

Costs of Quality (COQ)are classified into four categories: prevention costs,appraisal costs,opportunity costs,and sales costs.

ISO 9000 developed by the International Organization for Standardization is a set of five international standards for quality management.

Managers identify the relevant costs and benefits for each solution by focusing on ________.

A control chart identifies potential causes of failures or defects.

Which of the following is an advantage of nonfinancial measures of quality?

Which of the following is true of ISO 9000?

Which of the following is an advantage of COQ measures?

Ventaz Corp manufactures keyboards.The manufacturing cycle efficiency is 40%.What is its manufacturing time for value added if the manufacturing lead time is 120 minutes per keyboard?

A liability claim is an example of ________.

Distribution of questionnaires to customers regarding product quality and improving the product on certain key areas based on the inferences drawn from the questionnaires is an example of a nonfinancial measure of quality.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

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