Exam 14: Quality and Environmental Cost Management

The zero-defects model claims that it is cost beneficial to reduce nonconforming units to zero.

Carborundum 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 2018 to 2019?

Customers are concerned with product reliability, durability, fitness for use, and conformance to specifications.

Figure 14-9 As part of its environmental cost reporting system, Lamborghini Company tracks its total environmental costs. Consider the cost and sales data given: -Refer to Figure 14-9. What is the environmental costs as a percentage of sales for 2016?

In activity-based management, which quality cost would NOT be considered value-added?

Figure 14-7 At the beginning of the year, Molybdenum Company initiated an environmental cost reduction program. To help assess the impact of the environmental cost reduction improvement program, the following data was collected for the current and preceding year: -Refer to Figure 14-7. For the current year, detection costs are what percentage of operating costs?

Ecoefficiency is the ability to produce goods while reducing the impact on the environment.

Lower sales due to poor product performance is an example of

Figure 14-1 Phillips Screw 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 $15. A sample of five units produced showed the following values: -Refer to Figure 14-1. What is the average loss per unit?

Which of the following is NOT an external failure activity?

Using the abbreviations listed below, indicate for each of the costs whether the cost should be classified as: P = Prevention A = Appraisal I = Internal Failure E = External Failure N = none of the above 1. Packaging inspections 2. Process acceptance 3. Product acceptance 4. Quality audits 5. Quality circles 6. Reinspection after defect is corrected 7. Returns resulting from poor quality 8. Rework costs 9. Supplier evaluations 10. Warranty costs

Costs caused by the firm but are incurred and paid for by parties outside the firm are called:

In-process inspection is a(n)

Figure 14-4 At the beginning of the year, Marinov 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: -Refer to Figure 14-4. For the current year, external failure costs are what percentage of sales?

Figure 14-7 At the beginning of the year, Molybdenum Company initiated an environmental cost reduction program. To help assess the impact of the environmental cost reduction improvement program, the following data was collected for the current and preceding year: -Refer to Figure 14-7. For the current year, prevention costs are what percentage of operating costs?

What does quality mean and how has improving quality increased firm value?

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

Labor and overhead incurred for rework of defective products found by an inspector is a(n)

According to the robust view, a gain is experienced from varying a product target value.

Which of the following is NOT a dimension of quality?