Exam 14: Quality and Environmental Cost Management

Figure 14-3 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: - Refer to Figure 14-3.For the current year, internal failure costs are what percentage of sales?

_______________ assumes that variation from target values of a quality characteristic causes hidden quality costs.

_______________ are caused by the firm but are incurred and paid for by parties outside the firm.

_______________ is a predetermined amount of defective product that a company permits to be sold.

Improving quality can increase firm value because

Costs incurred to determine whether products and services are conforming to requirements are called

In an environmental cost report, environmental costs are grouped into categories and then each category of environmental costs is expressed as a percentage of

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

Costs incurred because products or services fail to meet requirements after delivery to customers are called

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: -What is the packing cost per unit of Product X1?

Figure 14-5 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: - Refer to Figure 14-5.For the current year, external failure costs are what percentage of sales?

Quality training programs are classified as

Which of the following is NOT an external failure activity?

Roberts Corporation reported the following operating costs and environmental quality costs for the past four years.Assume that all environmental quality costs are variable and that all changes in the quality cost ratios are due to an environmental cost reduction program. -What is the change in environmental costs from 2011 to 2012?

At the beginning of the year, Ball 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: Required:

The following information pertains to Kanyon, Inc., for 2011: -If quality costs were reduced to 2.5 percent of sales, profits would increase by

As part of its environmental cost reporting system, Jackson Company tracks its total environmental costs.Consider the cost and sales data given: - What is the environmental costs as a percentage of sales for 2012?

The following information pertains to Stan Corporation for 2011: Environmental External Failure costs amount to what percentage of total operating costs?

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

Figure 14-1 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 inches.Products produced at values beyond the specification limits lose $10.A sample of five units produced showed the following values: - Refer to Figure 14-1.What is the cost of hidden loss for production of 50,000 units?