Deck 12: Cost of Quality

Question 1

A quality cost report is usually compiled by the purchasing department to show the added costs of purchasing higher quality components.

Answer 1

False

Question 2

The most effective way to minimize quality costs while maintaining high quality is to avoid having quality problems in the first place. This is the reason for incurring appraisal costs.

Answer 2

False

Question 3

Which of the following would be classified as an internal failure cost on a quality cost report?

A) Quality improvement projects.
B) Supervision of testing and inspection activities.
C) Debugging software errors.
D) Warranty repairs and replacements.

Answer 3

C

Question 4

External failure costs are limited to the costs of repairing defective products that are under warranty.

Question 5

Quality of conformance refers to the extent to which a product offered by one company is similar to products offered by other companies.

Question 6

Quality is achieved when a product or service contains all of the features that a customer would expect, and when that product or service performs in such a way that the customer is satisfied.

Question 7

An increase in appraisal costs will usually result in an increase in:

A) prevention costs.
B) internal failure costs.
C) external failure costs.
D) opportunity costs.

Question 8

The cost of testing incoming materials received from suppliers would be classified as a(n):

A) prevention cost.
B) appraisal cost.
C) internal failure cost.
D) external failure cost.

Question 9

An increase in appraisal costs in a quality improvement program would usually have the following initial effects on internal and external failure costs:

A) Choice A
B) Choice B
C) Choice C
D) Choice D

Question 10

The cost of labor time required to rework defective units would be classified as a(n):

A) prevention cost.
B) appraisal cost.
C) internal failure cost.
D) external failure cost.

Question 11

Inspection of products would be classified as a(n):

A) prevention cost.
B) appraisal cost.
C) internal failure cost.
D) external failure cost.

Question 12

To minimize its total quality costs, a company should usually try to redistribute its quality costs more toward prevention and appraisal.

Question 13

In classifying the costs of quality at a company that manufactures sonar equipment, which of the following is considered an external failure cost?

A) the net cost of scrap and spoilage incurred during production.
B) the cost of repairs and replacements made during the warranty period.
C) the cost of debugging software errors found in the sonar equipment during inspection at the plant.
D) both the cost of repairs and replacements made during the warranty period and the cost of debugging software errors found in the sonar equipment during inspection at the plant.
E) none of the above.

Question 14

Which of the following would be classified as a prevention cost on a quality cost report?

A) Technical support provided to suppliers.
B) Net cost of spoilage.
C) Disposal of defective products.
D) Debugging software errors.

Question 15

The costs of lost sales arising from poor quality are always included in quality cost reports.

Question 16

The cost of quality training would be classified as a(n):

A) prevention cost.
B) appraisal cost.
C) internal failure cost.
D) external failure cost.

Question 17

Which of the following would be classified as an appraisal cost on a quality cost report?

A) Final product testing and inspection.
B) Net cost of spoilage.
C) Repairs and replacements beyond the warranty period.
D) Rework labor and overhead.

Question 18

The four categories of quality costs in a quality cost report are:

A) external failure, product liability, prevention, and carrying.
B) external failure, internal failure, prevention, and appraisal.
C) warranty, product liability, prevention, and appraisal.
D) warranty, product liability, training, and appraisal.

Question 19

ISO 9000 standards were established to make sure that all consumer products incorporate specific safety features.

Question 20

Which of the following would be classified as an internal failure cost on a quality cost report?

A) Audits of the effectiveness of the quality system.
B) Systems development.
C) Quality improvement projects.
D) Debugging software errors.

Question 21

Which of the following would be classified as a prevention cost on a quality cost report?

A) Supplies used in testing and inspection.
B) Debugging software errors.
C) Quality improvement projects.
D) Lost sales arising from a reputation for poor quality.

Question 22

Which of the following would be classified as an internal failure cost on a quality cost report?

A) Rework labor and overhead.
B) Cost of field servicing and handling complaints.
C) Technical support provided to suppliers.
D) Lost sales arising from a reputation for poor quality.

Question 23

Which of the following would be classified as an external failure cost on a quality cost report?

A) Returns and allowances arising from quality problems.
B) Quality improvement projects.
C) Quality engineering.
D) Net cost of spoilage.

Question 24

Which of the following would be classified as a prevention cost on a quality cost report?

A) Net cost of spoilage.
B) Supervision of testing and inspection activities.
C) Liability arising from defective products.
D) Technical support provided to suppliers.

Question 25

In preparing a quality cost report, the cost of employee's time spent in quality circles is part of:

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

Question 26

Which of the following would be classified as an internal failure cost on a quality cost report?

A) Rework labor and overhead.
B) Technical support provided to suppliers.
C) Quality improvement projects.
D) Systems development.

Question 27

Which of the following would be classified as an internal failure cost on a quality cost report?

A) Final product testing and inspection.
B) Warranty repairs and replacements.
C) Depreciation of test equipment.
D) Debugging software errors.

Question 28

Which of the following would be classified as an appraisal cost on a quality cost report?

A) Debugging software errors.
B) Supplies used in testing and inspection.
C) Re-entering data because of keying errors.
D) Warranty repairs and replacements.

Question 29

Which of the following would be classified as an external failure cost on a quality cost report?

A) Final product testing and inspection.
B) Disposal of defective products.
C) Supervision of testing and inspection activities.
D) Cost of field servicing and handling complaints.

Question 30

Which of the following would be classified as an external failure cost on a quality cost report?

A) Repairs and replacements beyond the warranty period.
B) Technical support provided to suppliers.
C) Quality improvement projects.
D) Rework labor and overhead.

Question 31

Which of the following would be classified as an external failure cost on a quality cost report?

A) Depreciation of test equipment.
B) Repairs and replacements beyond the warranty period.
C) Supplies used in testing and inspection.
D) Re-entering data because of keying errors.

Question 32

Which of the following would be classified as an appraisal cost on a quality cost report?

A) Test and inspection of in-process goods.
B) Technical support provided to suppliers.
C) Debugging software errors.
D) Audits of the effectiveness of the quality system.

Question 33

Which of the following would be classified as a prevention cost on a quality cost report?

A) Disposal of defective products.
B) Net cost of spoilage.
C) Depreciation of test equipment.
D) Technical support provided to suppliers.

Question 34

Which of the following would be classified as an appraisal cost on a quality cost report?

A) Returns and allowances arising from quality problems.
B) Downtime caused by quality problems.
C) Test and inspection of in-process goods.
D) Cost of field servicing and handling complaints.

Question 35

Which of the following would be classified as a prevention cost on a quality cost report?

A) Cost of field servicing and handling complaints.
B) Warranty repairs and replacements.
C) Systems development.
D) Rework labor and overhead.

Question 36

Which of the following would be classified as a prevention cost on a quality cost report?

A) Debugging software errors.
B) Quality training.
C) Test and inspection of incoming materials.
D) Cost of field servicing and handling complaints.

Question 37

Which of the following would be classified as an external failure cost on a quality cost report?

A) Reentering data because of keying errors.
B) Customer returns arising from quality problems.
C) Test and inspection of in-process goods.
D) Rework labor and overhead.

Question 38

Which of the following would be classified as an appraisal cost on a quality cost report?

A) Quality improvement projects.
B) Supplies used in testing and inspection.
C) Audits of the effectiveness of the quality system.
D) Quality data gathering, analysis, and reporting.

Question 39

Which of the following would be classified as an external failure cost on a quality cost report?

A) Re-entering data because of keying errors.
B) Repairs and replacements beyond the warranty period.
C) Disposal of defective products.
D) Technical support provided to suppliers.

Question 40

Which of the following would be classified as an external failure cost on a quality cost report?

A) Depreciation of test equipment.
B) Test and inspection of in-process goods.
C) Test and inspection of incoming materials.
D) Warranty repairs and replacements.

Question 41

Fabrick Company's quality cost report is to be based on the following data: What would be the total internal failure cost appearing on the quality cost report?

A) $212,000
B) $166,000
C) $122,000
D) $114,000

Question 42

Circle K Toys, Inc. manufactures toys and children's clothing and sells these products to retail outlets. The following costs were incurred in performing quality activities at Circle K during the year: What is the total of the internal failure costs for Circle K?

A) $53,000
B) $99,000
C) $517,000
D) $38,000

Question 43

Adolphson Corporation has provided the following summary of its quality cost report for the last two years: On the basis of this report, which one of the following statements is most likely correct?

A) An increase in prevention and appraisal costs resulted in fewer defects, and therefore, resulted in a decrease in internal and external failure costs.
B) A decrease in internal and external failure costs resulted in less need for prevention and appraisal costs.
C) Quality costs such as scrap and rework decreased by 48%.
D) Quality costs such as returns and repairs under warranty decreased by 40%.

Question 44

Eaglin Company's quality cost report is to be based on the following data: What would be the total external failure cost appearing on the quality cost report?

A) $259,000
B) $110,000
C) $119,000
D) $515,000

Question 45

Eaglin Company's quality cost report is to be based on the following data: What would be the total prevention cost appearing on the quality cost report?

A) $55,000
B) $30,000
C) $62,000
D) $133,000

Question 46

Eagleson Company's quality cost report is to be based on the following data: What would be the total appraisal cost appearing on the quality cost report?

A) $93,000
B) $62,000
C) $39,000
D) $83,000

Question 47

Fackler Company's quality cost report is to be based on the following data: What would be the total appraisal cost appearing on the quality cost report?

A) $130,000
B) $152,000
C) $146,000
D) $219,000

Question 48

Fabrick Company's quality cost report is to be based on the following data: What would be the total external failure cost appearing on the quality cost report?

A) $94,000
B) $480,000
C) $104,000
D) $306,000

Question 49

Eagleson Company's quality cost report is to be based on the following data: What would be the total prevention cost appearing on the quality cost report?

A) $107,000
B) $125,000
C) $84,000
D) $89,000

Question 50

Eagleson Company's quality cost report is to be based on the following data: What would be the total internal failure cost appearing on the quality cost report?

A) $155,000
B) $150,000
C) $96,000
D) $107,000

Question 51

Eaglin Company's quality cost report is to be based on the following data: What would be the total internal failure cost appearing on the quality cost report?

A) $119,000
B) $149,000
C) $156,000
D) $140,000

Question 52

Fackler Company's quality cost report is to be based on the following data: What would be the total internal failure cost appearing on the quality cost report?

A) $143,000
B) $146,000
C) $97,000
D) $43,000

Question 53

Eaglin Company's quality cost report is to be based on the following data: What would be the total appraisal cost appearing on the quality cost report?

A) $194,000
B) $175,000
C) $112,000
D) $167,000

Question 54

Fackler Company's quality cost report is to be based on the following data: What would be the total external failure cost appearing on the quality cost report?

A) $57,000
B) $62,000
C) $205,000
D) $424,000

Question 55

Eagleson Company's quality cost report is to be based on the following data: What would be the total external failure cost appearing on the quality cost report?

A) $262,000
B) $155,000
C) $112,000
D) $451,000

Question 56

Fackler Company's quality cost report is to be based on the following data: What would be the total prevention cost appearing on the quality cost report?

A) $99,000
B) $67,000
C) $120,000
D) $79,000

Question 57

Which of the following would be classified as an appraisal cost on a quality cost report?

A) Maintenance of test equipment.
B) Re-entering data because of keying errors.
C) Debugging software errors.
D) Warranty repairs and replacements.

Question 58

Fabrick Company's quality cost report is to be based on the following data: What would be the total prevention cost appearing on the quality cost report?

A) $101,000
B) $72,000
C) $73,000
D) $96,000

Question 59

Fabrick Company's quality cost report is to be based on the following data: What would be the total appraisal cost appearing on the quality cost report?

A) $122,000
B) $174,000
C) $104,000
D) $102,000

Question 60

Circle K Toys, Inc. manufactures toys and children's clothing and sells these products to retail outlets. The following costs were incurred in performing quality activities at Circle K during the year: What is the total of the prevention costs for Circle K?

A) $394,000
B) $409,000
C) $455,000
D) $470,000

Question 61

Gadsen Company's quality cost report is to be based on the following data:
Required:
Prepare a Quality Cost Report in good form with separate sections for prevention costs, appraisal costs, internal failure costs, and external failure costs.

Question 62

Galben Company's quality cost report is to be based on the following data:
Required:
Prepare a Quality Cost Report in good form with separate sections for prevention costs, appraisal costs, internal failure costs, and external failure costs.

Question 63

Harwood Company's quality cost report is to be based on the following data:
Required:
Prepare a Quality Cost Report in good form with separate sections for prevention costs, appraisal costs, internal failure costs, and external failure costs.

Question 64

Galaviz Company's quality cost report is to be based on the following data:
Required:
Prepare a Quality Cost Report in good form with separate sections for prevention costs, appraisal costs, internal failure costs, and external failure costs.

Question 65

Rigoletto Company's quality cost report is to be based on the following data:
Required:
Prepare a Quality Cost Report in good form with separate sections for prevention costs, appraisal costs, internal failure costs, and external failure costs.

Question 66

Hartnett Company's quality cost report is to be based on the following data:
Required:
Prepare a Quality Cost Report in good form with separate sections for prevention costs, appraisal costs, internal failure costs, and external failure costs.