Deck 20: Cost of Quality

Question 1

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

Answer 1

False

Question 2

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.

Answer 2

B

Question 3

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

A) Supplies used in testing and inspection.
B) Test and inspection of incoming materials.
C) Plant utilities in the inspection area.
D) Downtime caused by quality problems.

Answer 3

D

Question 4

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

Question 5

Fagin 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) $119,000
B) $84,000
C) $96,000
D) $120,000

Question 6

Earll 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) $92,000
B) $102,000
C) $184,000
D) $104,000

Question 7

Earll 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) $153,000
B) $26,000
C) $413,000
D) $69,000

Question 8

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

Question 9

Earll Company's quality cost report is to be based on the following data:



-A quality cost incurred to detect individual units that do not conform to specifications is an example of a(n):

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

Question 10

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

A) Systems development.
B) Plant utilities in the inspection area.
C) Lost sales arising from a reputation for poor quality.
D) Audits of the effectiveness of the quality system.

Question 11

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

A) Quality training.
B) Liability arising from defective products.
C) Test and inspection of incoming materials.
D) Quality engineering.

Question 12

Earll 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) $127,000
B) $26,000
C) $84,000
D) $150,000

Question 13

Fagin 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) $216,000
B) $78,000
C) $150,000
D) $97,000

Question 14

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

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

Question 15

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

A) Quality circles.
B) Rework labor and overhead.
C) Downtime caused by quality problems.
D) Supervision of testing and inspection activities.

Question 16

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

A) Debugging software errors.
B) Final product testing and inspection.
C) Depreciation of test equipment.
D) Liability arising from defective products.

Question 17

Earll 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) $145,000
B) $75,000
C) $93,000
D) $76,000

Question 18

The cost of disposing of defective units would be classified as a(n):

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

Question 19

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

A) Warranty repairs and replacements.
B) Quality engineering.
C) Test and inspection of in-process goods.
D) Net cost of scrap.

Question 20

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) Quality engineering.
C) Lost sales arising from a reputation for poor quality.
D) Supervision of testing and inspection activities.

Question 21

Harville 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 22

Fagin 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) $113,000
B) $263,000
C) $102,000
D) $479,000

Question 23

Gabris 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 24

Fagin 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) $150,000
B) $155,000
C) $178,000
D) $49,000