Question 1

Which of the following is generally not one of the classifications of quality costs?

Accepted Answer

The generally accepted classifications of quality costs are appraisal (detection) costs, prevention costs, internal failure costs, and external failure costs. Internal control costs are not typically considered to be one of the classifications.

Question 2

Which types of quality costs are incurred in the course of inspecting, identifying, and isolating defective products and services before they reach the customer?

Accepted Answer

The quality costs incurred in inspecting, identifying, and isolating defective products and services before they reach the customer are appraisal (detection) costs. These costs are incurred to determine whether products or services meet quality standards and to identify and correct any defects before the finished product is delivered to the customer. Examples of appraisal costs include inspection, testing, and process control.

Question 3

Which of the following statements about kaizen is false?

Accepted Answer

Kaizen is focused on continuous small improvements that can be achieved with minimal investments. It does not involve major changes that require large investments.

Question 4

Which of the following statements about quality costs is true?

Accepted Answer

Internal failure costs refer to the costs incurred within the organization due to defects or errors in the production process, while prevention costs and appraisal costs are incurred to prevent or detect defects, respectively. Therefore, a high level of internal failure costs indicates that there may be issues with the prevention and appraisal processes, and more attention should be paid to those areas. Choice A is incorrect because it suggests that a low level of internal failure costs is desirable, which is not necessarily true. Choice B is incorrect because it suggests that a low level of external failure costs means that more attention should be paid to appraisal and internal failure costs, which may not be the case. Choice D is incorrect because it suggests that a high level of appraisal costs indicates a problem with external failure costs, which is not necessarily true either.

Question 5

FMI is a car manufacturer. Recently, they have had to recall approximately 6,000 cars due to potential brake pad malfunction. The costs to inspect and replace the brake pads would most likely be classified as which type of quality cost?

Accepted Answer

External failure costs are incurred when defects are found after the product has been delivered to the customer, such as the costs associated with recalling and repairing cars.

Question 6

Newman Co. provides training and technical support to its suppliers in order to increase the quality of purchased raw materials. Which type of quality cost would this most likely be?

Accepted Answer

Providing training and technical support to suppliers is an example of prevention cost, which is a cost incurred to prevent defects from occurring in the first place. This is aimed at improving the quality of purchased raw materials before they reach the production process.

Question 7

Bradford Inc. Bradford Inc. manufactures and sells digital cameras. Bradford's management team has begun an intensive program whereby more time and effort are to be focused on product quality than were focused on in the past. The following data has been compiled regarding expected quality costs in the upcoming year:
 Refer to the Bradford Inc. information above. What are Bradford's total appraisal (detection) costs?

Accepted Answer

Total appraisal (detection) costs = Inspection costs + Testing costs 
Total appraisal (detection) costs = $70,000 + $80,000 = $150,000

Question 8

Which of the following statements about quality costs is true?

Accepted Answer

External failure costs, such as warranty and liability claims, can be very costly for a company if they produce and sell a defective product. These costs may include legal expenses, returned goods, and damaged reputation. Thus, external failure costs are likely to exceed all the other types of quality costs if a company produces and sells a defective product.

Question 9

External failure costs include:

Accepted Answer

External failure costs include all of the options mentioned, i.e. lost sales, costs associated with product repairs made under warranty, and product recall costs.

Question 10

Which types of quality costs are incurred once the product is produced and then found to be defective before being sold to customers?

Accepted Answer

Internal failure costs are incurred once the product is produced and found to be defective before being sold. These costs include the cost of rework, scrap, and disposal, as well as the cost of investigating the cause of the defect and the potential impact on customers.

Question 11

Which of the following statements regarding "quality" is true?

Accepted Answer

All of the statements are true. The demand for quality products and services has indeed drastically changed the way companies do business, and improving quality can lead to higher customer satisfaction, reduced costs, and increased profitability. Companies have implemented various initiatives like TQM, market-driven quality, and strategic quality management to improve their offerings.

Question 12

Which of the following statements about quality costs is true?

Accepted Answer

All of these statements are true. External and internal failure costs can be reduced by improving quality at an earlier stage in the value chain, increasing expenditures related to prevention and appraisal can result in overall cost savings, and it may be wise to increase spending in certain areas in order to decrease other costs in the long run.

Question 13

Which of the following statements about prevention costs is true?

Accepted Answer

Prevention costs are incurred in order to prevent or reduce the likelihood of future defects or problems. Design and engineering costs are considered prevention costs as they help prevent defects from occurring in the first place. In general, companies find that investing in prevention costs can reduce the long-run costs associated with product failures.

Question 14

If a company consistently produces and sells defective products, which type of quality cost is likely to be the most costly in the long-run?

Accepted Answer

External failure costs tend to be the most costly in the long run when a company consistently produces and sells defective products. These costs include warranties, returns, lost sales, and damaged reputation, which can significantly impact a company's financial health and brand image over time.

Question 15

Barksdale Manufacturing Inc. produces its products in batches containing 100 units. Barksdale randomly samples 15 of the units in each batch for quality control. The costs of performing these random sample tests would most likely be which type of quality cost?

Accepted Answer

The cost of performing random sample tests to ensure quality control is categorized under appraisal (detection) cost as it is a cost incurred to identify defects before the product is shipped to the customer.

Question 16

Which types of quality costs are incurred to eliminate quality problems before they occur?

Accepted Answer

Prevention costs are incurred to prevent quality problems before they occur. These costs include activities such as training employees, implementing quality management systems, and performing preventive maintenance on equipment. Appraisal (detection) costs, on the other hand, are incurred to detect quality problems after they occur. External failure costs and internal failure costs are incurred due to quality problems that have already occurred.

Question 17

Bradford Inc. Bradford Inc. manufactures and sells digital cameras. Bradford's management team has begun an intensive program whereby more time and effort are to be focused on product quality than were focused on in the past. The following data has been compiled regarding expected quality costs in the upcoming year:
 Refer to the Bradford Inc. information above. What are Bradford's total prevention costs?

Accepted Answer

The answer of Bradford Inc. Bradford Inc. manufactures and sells...

Question 18

Which types of quality costs are incurred after a defective product is delivered to a customer?

Accepted Answer

External failure costs are incurred after a product has been delivered to the customer and a defect is found. These costs include warranties, returns, and repairs.

Question 19

Which of the following statements regarding "quality" is false?

Accepted Answer

Studies have actually found the opposite to be true. Companies that invest in quality often see long-term benefits such as increased customer satisfaction and loyalty, improved reputation, and reduced costs from rework and customer complaints.

Question 20

CLR Inc. is a clothing manufacturer. Recently, CLR made and produced about 2,000 shirts. During the production process, some of the shirts did not have the required number of buttons sewed on. CLR has decided to rework the shirts to add the buttons. These rework costs would most likely be classified as which type of quality cost?

Accepted Answer

Reworking the shirts to add the missing buttons is an example of internal failure costs, as it involves correcting a quality defect found within the company's own production process before the shirts are shipped to customers.

Quiz 11: Decentralization, Performance Evaluation, and the Balanced Scorecard

Which of the following is generally not one of the classifications of quality costs?

Which types of quality costs are incurred in the course of inspecting, identifying, and isolating defective products and services before they reach the customer?

Which of the following statements about kaizen is false?

Which of the following statements about quality costs is true?

FMI is a car manufacturer. Recently, they have had to recall approximately 6,000 cars due to potential brake pad malfunction. The costs to inspect and replace the brake pads would most likely be classified as which type of quality cost?

Newman Co. provides training and technical support to its suppliers in order to increase the quality of purchased raw materials. Which type of quality cost would this most likely be?

Which of the following statements about quality costs is true?

External failure costs include:

Which types of quality costs are incurred once the product is produced and then found to be defective before being sold to customers?

Which of the following statements regarding "quality" is true?

Which of the following statements about quality costs is true?

Which of the following statements about prevention costs is true?

If a company consistently produces and sells defective products, which type of quality cost is likely to be the most costly in the long-run?

Barksdale Manufacturing Inc. produces its products in batches containing 100 units. Barksdale randomly samples 15 of the units in each batch for quality control. The costs of performing these random sample tests would most likely be which type of quality cost?

Which types of quality costs are incurred to eliminate quality problems before they occur?

Which types of quality costs are incurred after a defective product is delivered to a customer?

Which of the following statements regarding "quality" is false?