Question 1

​When quality costs reach the optimal range of 2 to 4% of sales, control costs typically account for about _____ of total quality costs.

Accepted Answer

When quality costs reach the optimal range of 2 to 4% of sales, control costs typically account for about 80 to 85% of total quality costs. This means that a significant portion of quality costs is spent on activities related to controlling quality, such as inspections, testing, and audits. This emphasizes the importance of effective control processes in minimizing quality costs and maximizing customer satisfaction.

Question 2

Which of the following is true of an interim quality cost report?

Accepted Answer

An interim quality cost report compares the actual quality costs for a specific period with the budgeted costs for that same period. It serves as a progress report that allows management to compare the expected results with the actual results, identifying variances and taking corrective actions. It considers all quality costs, including prevention costs, appraisal costs, internal failure costs, and external failure costs. Therefore, option A is correct, while options B, C, and D are incorrect.

Question 3

​Which of the following is true of a multiple-period quality trend report?

Accepted Answer

A multiple-period quality trend report provides a chart or graph that tracks the change in quality from the beginning of a quality improvement program to the present. It shows trends over time and helps management identify areas that need improvement. Option A is incorrect because it refers to a within-period quality report. Option B is incorrect because it refers to a quality cost report. Option D is incorrect because prevention costs are considered in quality trend reports.

Question 4

_____ are costs incurred because products or services are produced that do not conform to specifications.

Accepted Answer

Failure costs are incurred when products or services do not meet the required specifications or fail to perform the intended function. These costs include scrap, rework, and warranty costs.

Question 5

​The objective of quality cost management is to find ways to reduce total quality costs to _____, the optimal range recommended by quality experts.

Accepted Answer

Quality experts recommend that total quality costs should be between 2 to 4% of sales. Therefore, the objective of quality cost management is to reduce these costs and bring them within this optimal range. Option A is the only choice that falls within this range. The other options are too high and would not be considered optimal by quality experts.

Question 6

Learner Corp.had total sales of $20,000,000 for the fiscal year ending on December 31, 20X1.  
Learner's costs of quality are as follows:
 
 Calculate Learner' s appraisal cost for the year.

Accepted Answer

Learner's appraisal cost for the year = Cost related to process acceptance + Cost related to field testing = $175,000 + $90,000  = $265,000

Question 7

​_____ are incurred to determine whether products and services are conforming to their requirements.

Accepted Answer

Appraisal costs are incurred to determine whether products and services are conforming to their requirements. Prevention costs, on the other hand, are incurred to prevent defects from occurring in the first place. Opportunity costs represent the benefits foregone when choosing one option over another, and sunk costs are costs that have already been incurred and cannot be recovered.

Question 8

​Which of the following is an appraisal cost?

Accepted Answer

Field testing is an appraisal cost because it involves evaluating a product's performance under actual operating conditions to ensure it meets the required specifications and quality standards.

Question 9

Which of the following is an external failure cost?​

Accepted Answer

Warranties are the external failure cost as they are incurred after the product has been sold and customer complaints are received.

Question 10

​Which of the following is true of internal failure costs?

Accepted Answer

Internal failure costs are costs incurred when lack of conformity to requirements is discovered prior to external sale. These costs include reworking or repairing defective products, scrapping or disposing of defective products, and downtime and lost productivity due to quality problems.

Question 11

​Which of the following is true of external failure costs?

Accepted Answer

External failure costs refer to costs incurred after a defective product or service has been delivered to customers, which can be the most devastating of all the quality costs. These costs can include expenses related to warranty repairs or replacements, legal fees, lost sales, and damage to brand reputation.

Question 12

​Lean manufacturing is concerned with:

Accepted Answer

Lean manufacturing is a philosophy that aims to eliminate waste (known as Muda) in manufacturing processes. This includes but is not limited to wasted resources, time, and materials. The goal is to increase efficiency and improve quality while minimizing costs. Increasing lead time, inventory levels, or cycle time goes against the principles of lean manufacturing.

Question 13

The key factors in achieving reduced wait and move times in manufacturing processes are:​

Accepted Answer

Low setup times and continuous flow manufacturing are essential for achieving reduced wait and move times in manufacturing processes. By reducing the time it takes to set up a production line, and by using continuous flow manufacturing processes, businesses can minimize wait times and move times, which can result in increased productivity and efficiency. High cycle times, traditional manufacturing setup, high wait times, and large batches of products can all contribute to longer wait and move times and should be avoided. Similarly, low variety of products and high changeover times can also create delays and inefficiencies, so businesses should strive to have a high variety of products and minimize changeover times as much as possible.

Question 14

Which of the following is true of lean manufacturing?​

Accepted Answer

Lean manufacturing seeks to achieve zero defects through the elimination of waste and continuous improvement of processes. This results in higher quality products and reduced costs. Eliminating waste also leads to increased efficiency and reduced human effort, contradicting option A. Option C is incorrect because lean manufacturing organizes production by value streams, not departments, and aims to produce in smaller batches to reduce inventory and lead times. Option D is incorrect because lean manufacturing aims to eliminate move time and wait time through the use of continuous flow processes.

Question 15

​The financial significance of quality costs can be assessed more easily by expressing these costs as a percentage of:

Accepted Answer

Expressing quality costs as a percentage of actual sales allows for a direct comparison of the impact of these costs on the revenue generated by the company, making it easier to assess their financial significance.

Question 16

Planet Company had total sales of $15,000,000 for the fiscal year ending on December 31, 20X1. Planet's costs of quality are as follows:
 
 Calculate Planet's prevention cost for the year.

Accepted Answer

Planet's prevention cost = Cost related to quality audits + Cost related to prototype inspection = $15,000 + $90,000 = $105,000

Question 17

​Which of the following is a prevention cost?

Accepted Answer

The answer of ​Which of the following is a prevention...

Question 18

​Which of the following is an internal failure cost?

Accepted Answer

Repairs are an internal failure cost, as they involve fixing defects discovered during the production process or within the organization's operations. Warranties and recalls are external failure costs, as these expenses arise from customer complaints and returns of products. Field testing is a prevention cost, as it helps to identify and prevent potential defects before they occur.

Question 19

​Control costs can be subdivided into prevention and:

Accepted Answer

Control costs can be divided into two categories: prevention costs and appraisal costs. Prevention costs are those costs incurred to prevent defects from occurring, whereas appraisal costs are those incurred to detect defects after they have occurred. Sunk costs, opportunity costs, and failure costs are not directly related to the control of costs.

Question 20

​Which of the following is true of prevention costs?

Accepted Answer

Prevention costs are expenses related to preventing defects or issues in products or services. When prevention costs increase, it typically means a company is investing more in quality control, training, and process improvements, which should logically lead to a decrease in the costs associated with failures, both internal and external. This is because better prevention reduces the likelihood of defects and errors that lead to failures.

Quiz 13: Emerging Topics in Managerial Accounting: Sustainability, Quality Cost, Lean Accounting, International Issues, Enterprise Risk Management, the Managerial Accountant in Forensicfraud Accounting

​When quality costs reach the optimal range of 2 to 4% of sales, control costs typically account for about _____ of total quality costs.

Which of the following is true of an interim quality cost report?

​Which of the following is true of a multiple-period quality trend report?

_____ are costs incurred because products or services are produced that do not conform to specifications.

​The objective of quality cost management is to find ways to reduce total quality costs to _____, the optimal range recommended by quality experts.

Learner Corp.had total sales of $20,000,000 for the fiscal year ending on December 31, 20X1. Learner's costs of quality are as follows: Calculate Learner' s appraisal cost for the year.

​_____ are incurred to determine whether products and services are conforming to their requirements.

​Which of the following is an appraisal cost?

Which of the following is an external failure cost?​

​Which of the following is true of internal failure costs?

​Which of the following is true of external failure costs?

​Lean manufacturing is concerned with:

The key factors in achieving reduced wait and move times in manufacturing processes are:​

Which of the following is true of lean manufacturing?​

​The financial significance of quality costs can be assessed more easily by expressing these costs as a percentage of:

Planet Company had total sales of $15,000,000 for the fiscal year ending on December 31, 20X1. Planet's costs of quality are as follows: Calculate Planet's prevention cost for the year.

​Which of the following is a prevention cost?

​Which of the following is an internal failure cost?

​Control costs can be subdivided into prevention and:

​Which of the following is true of prevention costs?

When quality costs reach the optimal range of 2 to 4% of sales, control costs typically account for about _____ of total quality costs.

Which of the following is true of a multiple-period quality trend report?

The objective of quality cost management is to find ways to reduce total quality costs to _____, the optimal range recommended by quality experts.

_____ are incurred to determine whether products and services are conforming to their requirements.

Which of the following is an appraisal cost?

Which of the following is an external failure cost?

Which of the following is true of internal failure costs?

Which of the following is true of external failure costs?

Lean manufacturing is concerned with:

The key factors in achieving reduced wait and move times in manufacturing processes are:

Which of the following is true of lean manufacturing?

The financial significance of quality costs can be assessed more easily by expressing these costs as a percentage of:

Which of the following is a prevention cost?

Which of the following is an internal failure cost?

Control costs can be subdivided into prevention and:

Which of the following is true of prevention costs?