Question 1

All of the following are the result of producing poor-quality products except ________.
A)decreased costs
B)decreased revenues
C)customer awareness of quality problems
D)increased product repairs

Accepted Answer

Producing poor-quality products usually leads to increased costs due to the need for repairs and reworking. It can also result in decreased revenues as customers become dissatisfied with the product and choose to buy from competitors instead. Customer awareness of quality problems is a common outcome of poor-quality products, which can further harm the company's reputation. The only option that doesn't typically result from poor-quality products is decreased costs.

Question 2

Companies using just-in-time production systems are far more vulnerable to production shutdowns if they receive defective raw materials.

Accepted Answer

Just-in-time production systems rely on receiving materials and components precisely when they are needed in the production process. If defective raw materials are received, production may be delayed or halted as replacement materials are sourced. This can have a cascade effect throughout the rest of the production process and increase the risk of production shutdowns.

Question 3

Marino,Inc.completed the production of 500 units with standard costs of $520 for direct materials and $75 for conversion costs.During the current year,it incurred $260,000 for direct materials and $31,000 for conversion costs.The company uses a just-in-time costing system.Record the adjusting entry for the amount of underallocated or overallocated conversion costs.Omit explanation.

Accepted Answer

The answer of Marino,Inc.completed the production of 500 units with...

Question 4

When preparing the report to analyze a proposed quality improvement program,which of the following costs are included in the total costs of undertaking the quality improvement program?
A)warranty costs
B)sales returns
C)inspection of raw materials
D)cost of rework

Accepted Answer

Inspection of raw materials is a preventive cost associated with quality improvement programs, aimed at ensuring quality before defects occur.

Question 5

Quality management systems (QMS)are systems that help managers improve the business's performance by providing quality products and services.

Accepted Answer

Quality management systems are designed to help managers improve the quality of their products and services and ultimately improve the overall performance of their business. QMS provide a set of policies, procedures, and processes that are implemented throughout the organization to ensure quality is embedded in all aspects of the business operations. This helps to minimize errors and defects and ensure customers receive products and services that meet or exceed their expectations.

Question 6

When preparing the report to analyze a proposed quality improvement program,which of the following are included in the costs to continue without the quality improvement program?
A)prevention and appraisal
B)prevention and internal failure
C)internal and external failure
D)appraisal and external failure

Accepted Answer

The costs to continue without the quality improvement program include both internal and external failure costs. Internal failure costs refer to the costs incurred due to defects discovered before the product or service is delivered to the customer, such as rework, scrap, and reinspection. External failure costs refer to the costs incurred as a result of quality problems that are discovered by the customer, such as warranty claims, product returns, and lost sales due to a damaged reputation. Prevention and appraisal costs are involved in implementing the quality improvement program, not in continuing without it.

Question 7

Esposito,Inc.uses a just-in-time costing system.During the month,Esposito incurred $700,000 as direct labor and $8000 as overhead.Wages were not paid.Which of the following is the correct journal entry to record the conversion costs?
A) $$\begin{array} { | c | l | l | } 
\hline \text { Conversion Costs } & 708,000 & \
\hline \text { Wages Payable, Accumulated Depreciation, etc. } & & 708,000 \
\hline
\end{array}$$
B) $$\begin{array} { | c | l | l | } 
\hline \text { Conversion Costs } & 708,000 & \
\hline \text { Wages Payable } & & 708,000 \
\hline
\end{array}$$
C) $$\begin{array} { | c | l | l | } 
\hline \text { Manufacturing Overhead } & 708,000 & \
\hline \text { Conversion Costs } & & 708,000 \
\hline
\end{array}$$
D) $$\begin{array} { | c | l | l | } 
\hline \text { Conversion Costs } & 708,000 & \
\hline \text { Accounts Payable } & & 708,000 \
\hline
\end{array}$$

Accepted Answer

Conversion costs include both direct labor and overhead costs. Since wages were not paid, the entry should not include Wages Payable.

Question 8

Which of the following accounts would NOT be used with just-in-time costing?
A)Finished Goods Inventory
B)Raw Materials Inventory
C)Conversion Costs
D)Cost of Goods Sold

Accepted Answer

Just-in-time costing typically eliminates the need for a Raw Materials Inventory account, as materials are purchased and used as needed, reducing inventory levels.

Question 9

Under a just-in-time costing system,the journal entry that is recorded when the goods are completed and moved to Finished Goods Inventory is ________.
A) Finished Goods Inventory
Raw and In-Process Inventory
B) Finished Goods Inventory
Raw and In-Process Inventory
Conversion Costs
C) Finished Goods Inventory
Conversion Costs
D) $$\begin{array} { | l | } 
\hline\text { Raw and In-Process Inventory }\
\hline \text { Conversion Costs } \
\hline \text { Finished Goods Inventory } \
\hline
\end{array}$$

Accepted Answer

Under a just-in-time costing system, the journal entry that is recorded when the goods are completed and moved to Finished Goods Inventory is to debit Finished Goods Inventory and credit Raw and In-Process Inventory and Conversion Costs.

Question 10

The common factor in all quality management systems is the desire to _________.
A)improve performance
B)increase the number of quality inspections
C)complete repairs in a timely manner
D)ignore the costs and benefits of changes to products

Accepted Answer

The common factor in all quality management systems is the desire to improve performance, whether it's in terms of product quality, process efficiency, or customer satisfaction. While the other options (B, C, and D) may be important aspects of quality management, they are not the overarching goal that unifies all quality management systems.

Question 11

Which of the following practices is incompatible with a just-in-time management system?
A)ordering large quantities of raw materials in order to obtain volume discounts
B)reliance on contracts with suppliers to deliver raw materials when needed
C)pursuing frequent deliveries of defect-free materials from suppliers
D)completing work in self-contained work cells

Accepted Answer

Ordering large quantities of raw materials contradicts the principles of JIT, which emphasizes on producing in small batches as per the demand. The aim is to reduce inventory levels and avoid wastage, which is not possible when ordering large quantities to obtain volume discounts.

Question 12

Companies which use a just-in-time management system do not benefit from a quality management system.

Accepted Answer

Just-in-time management system aims to eliminate waste and reduce inventory by producing goods in small quantities as needed. However, it is crucial to have a quality management system to ensure that the manufactured goods meet the required quality standards. Without a quality management system, the risk of producing defective goods is high, which may lead to delays, higher costs, and loss of customer trust.

Question 13

Kaminski,Inc.has adopted a JIT management system and has the following transactions in December:
 Dec 3 Purchased raw materials on account, $80,000
Dec 8 Incurred labor and overhead costs, $105,000. Wages were not paid.
Dec 15 Completed 750 units with standard costs of $106 for direct materials and $165 for conversion costs
Dec 23 Sold 650 units for $395 each on account. The company uses the perpetual inventory system. Record the journal entries for Kaminski,Inc.for December.Omit explanations.

Accepted Answer

The answer of Kaminski,Inc.has adopted a JIT management system and...

Question 14

Quality management systems emphasize external failure costs.

Accepted Answer

Quality management systems focus on preventing and reducing both internal and external failure costs, not just external. Internal failure costs include the costs of detecting and correcting defects before they reach the customer, while external failure costs include the costs of defects that result in customer complaints, returns, and lost business.

Question 15

The common factor in all quality management systems is the desire to improve the business's performance by providing quality products or services.

Accepted Answer

Quality management systems emphasize on improving the business's performance by ensuring the provision of quality products or services consistently. This can be achieved through various methods such as continuous improvement, customer focus, process management, and involvement of employees.

Question 16

Moretti Corporation has adopted a JIT management system and has the following transactions in March:
 Mar 5 Incurred labor and overhead costs, $\$ 95,000$
Mar 31 Completed 650 units with standard costs of $\$ 94$ for direct materials and $\$ 128$ for conversion costs Open a T-account for Conversion Costs.Post appropriate entries to determine the amount of underallocated or overallocated overhead.Record the adjusting entry on March 31.Omit explanation.

Accepted Answer

The answer of Moretti Corporation has adopted a JIT management...

Question 17

Cellular Connections,Inc.sold 2,500 cell phones on account for $700 each.The standard direct materials and conversion costs of each unit are $173.85 and $57.95,respectively.The company uses the perpetual inventory system.Record the journal entries for this transaction under the just-in-time costing system.Omit explanation.

Accepted Answer

The answer of Cellular Connections,Inc.sold 2,500 cell phones on account...

Question 18

Camilleri,Inc.completed the production of 500 units with standard costs of $520 for direct materials and $75 for conversion costs.During the current year,it incurred $260,000 for direct materials and $44,000 for conversion costs.The company uses a just-in-time costing system.Record the adjusting entry for the amount of underallocated or overallocated conversion costs.Omit explanation.

Accepted Answer

The answer of Camilleri,Inc.completed the production of 500 units with...

Question 19

Petrov Corporation has adopted a JIT management system and has the following transactions in February:
 Feb 2 Incurred labor and overhead costs, $89,00
Feb 18 Completed 750 units with standard costs of $93 for direct materials and $146 for conversion costs Open a T-account for Conversion Costs.Post appropriate entries to determine the amount of underallocated or overallocated overhead.Record the adjusting entry on February 28.Omit explanation.

Accepted Answer

The answer of Petrov Corporation has adopted a JIT management...

Question 20

Revenues decrease and costs increase when companies produce poor-quality products.

Accepted Answer

Poor-quality products can result in customer dissatisfaction and decreased sales, ultimately leading to decreased revenues. Additionally, the costs of fixing or replacing faulty products may increase, as well as potential legal fees or damage to the company's reputation.

Quiz 19: Cost Management Systems: Activity-Based, just-In-Time, and Quality Management Systems

All of the following are the result of producing poor-quality products except ________.

Companies using just-in-time production systems are far more vulnerable to production shutdowns if they receive defective raw materials.

When preparing the report to analyze a proposed quality improvement program,which of the following costs are included in the total costs of undertaking the quality improvement program?

Quality management systems (QMS)are systems that help managers improve the business's performance by providing quality products and services.

When preparing the report to analyze a proposed quality improvement program,which of the following are included in the costs to continue without the quality improvement program?

Esposito,Inc.uses a just-in-time costing system.During the month,Esposito incurred $700,000 as direct labor and $8000 as overhead.Wages were not paid.Which of the following is the correct journal entry to record the conversion costs?

Which of the following accounts would NOT be used with just-in-time costing?

Under a just-in-time costing system,the journal entry that is recorded when the goods are completed and moved to Finished Goods Inventory is ________.

The common factor in all quality management systems is the desire to _________.

Which of the following practices is incompatible with a just-in-time management system?

Companies which use a just-in-time management system do not benefit from a quality management system.

Quality management systems emphasize external failure costs.

The common factor in all quality management systems is the desire to improve the business's performance by providing quality products or services.

Revenues decrease and costs increase when companies produce poor-quality products.