Question 1

Costs incurred as a result of poor quality found through appraisal prior to delivery of the product to the customer are, in a Cost-of-Quality (COQ) reporting framework, considered:
A)External failure costs.
B)Appraisal costs.
C)Internal failure costs.
D)Prevention costs.
E)Conformity costs.

Accepted Answer

Costs incurred as a result of poor quality found through appraisal prior to delivery of the product to the customer are considered internal failure costs. These costs are incurred due to the product failing to meet the quality standards during the production process and require additional work to correct the defects before the final product can be delivered to the customer.

Question 2

For Cost of Quality (COQ) reporting purposes, contribution margin of canceled sales orders due to quality deficiency would be classified as:
A)Prevention costs.
B)Appraisal costs.
C)Internal failure costs.
D)External failure costs.
E)A lost sale, not a quality cost.

Accepted Answer

The contribution margin of canceled sales orders due to quality deficiency would be classified as external failure costs. External failure costs are costs incurred due to quality problems that occur after a product or service has been delivered to a customer, including warranty claims, repairs, and replacements. When a sales order is canceled due to quality deficiency, it represents a failure to meet customer expectations and is therefore categorized as an external failure cost.

Question 3

In a typical Cost of Quality (COQ) report, instructor fees for quality training would be classified as:
A)Prevention costs.
B)Retention costs.
C)Appraisal costs.
D)Internal failure costs.
E)External failure costs.

Accepted Answer

Instructor fees for quality training are a form of prevention cost, as they are aimed at preventing defects and errors from occurring in the first place by educating and training employees on the importance of quality and how to achieve it.

Question 4

All of the following are examples of internal nonfinancial quality indicators except:
A)Number of customer complaints.
B)Process yield (i.e., ratio of good outputs to total output).
C)Productivity (i.e., ratio of acceptable output to resource inputs).
D)Plant safety record (e.g., days since last major accident).
E)Throughput.

Accepted Answer

The answer of All of the following are examples of...

Question 5

The "cost of conformance" in a Cost-of-Quality reporting system includes:
A)Prevention costs and appraisal costs.
B)Internal failure costs and external failure costs.
C)Prevention costs and internal failure costs.
D)Appraisal costs and internal failure costs.
E)Prevention costs and external failure costs.

Accepted Answer

The cost of conformance in a Cost-of-Quality (COQ) reporting system includes prevention costs and appraisal costs. Prevention costs are expenses related to preventing defects before they happen, such as training and process improvement initiatives. Appraisal costs are expenses associated with evaluating products, processes, and systems to ensure quality standards are met, such as testing and inspections.

Question 6

Which of the following is not an external nonfinancial measure of quality?
A)Number of defective parts produced.
B)Number of defective units shipped to customers.
C)Number of customer complaints.
D)Delivery delays (e.g., difference between scheduled and actual delivery date).
E)Percentage of products that experience early or excessive failure.

Accepted Answer

The number of defective parts produced is an internal measure of quality, as it is something that can be controlled and monitored within the organization. The other options listed are all external measures of quality, as they involve the experiences and perceptions of customers or the impact on the customer.

Question 7

A graphical representation of the variation in a given set of data is a(n):
A)Control chart.
B)Pareto diagram.
C)Histogram.
D)Ishikawa diagram.
E)Cause-and-effect diagram.

Accepted Answer

A histogram is a graph that uses bars to represent the distribution of a set of continuous data. It displays the frequency distribution of a variable. Control charts, Pareto diagrams, Ishikawa diagrams and Cause-and-effect diagrams are all different types of graphical representations used for different purposes in statistical analysis.

Question 8

In a Cost of Quality (COQ) report, sales returns and allowances due to quality deficiency would be classified as:
A)Prevention costs.
B)Salvage costs.
C)Appraisal costs.
D)Internal failure costs.
E)External failure costs.

Accepted Answer

Sales returns and allowances due to quality deficiency are considered external failure costs. These costs occur when a product is returned or discounted due to a defect or quality issue. External failure costs are associated with the cost of replacing or repairing defective products, lost sales, and damage to the company's reputation.

Question 9

In a Cost of Quality (COQ) framework, warranty costs are properly classified as:
A)Prevention costs.
B)Retention costs.
C)Appraisal costs.
D)Internal failure costs.
E)External failure costs.

Accepted Answer

Warranty costs are classified as external failure costs because they occur after the product has been delivered to the customers and there is a failure. These costs include repair or replacement costs, shipping costs, and handling charges. They are considered to be external to the organization, as they are borne by the customers.

Question 10

In a Cost-of-Quality (COQ) reporting framework, costs incurred in conjunction with the measurement and analysis of data to ascertain conformity of products and services to specification are properly classified as:
A)External failure costs.
B)Appraisal costs.
C)Internal failure costs.
D)Prevention costs.
E)Value-added costs.

Accepted Answer

Costs incurred in conjunction with the measurement and analysis of data to ascertain conformity of products and services to specification are classified as Appraisal costs in the COQ reporting framework. These costs are associated with activities such as inspection, testing, and auditing. The purpose of appraisal costs is to detect non-conformities and prevent defective products or services from reaching the customers.

Question 11

Which of the following statements about nonfinancial indicators of quality is not true?
A)They can be useful predictors of future financial performance.
B)Generally speaking, they are more costly to generate than financial measures of quality.
C)They are timelier than financial data.
D)They are readily interpretable by operating personnel.
E)They help to identify precise quality-related problems.

Accepted Answer

Generally speaking, nonfinancial indicators of quality are less costly to generate than financial measures of quality. Nonfinancial indicators include measures of customer satisfaction, employee engagement, product defect rates, and process cycle times. While these measures may require investments in data collection and analysis, they can provide valuable insights into operational effectiveness and opportunities for improvement. Financial measures, on the other hand, often require significant resources to compile and verify, especially in organizations with complex accounting systems.

Question 12

In a Cost of Quality (COQ) framework, rework costs incurred before shipment of product are considered:
A)Prevention costs.
B)Retention costs.
C)Appraisal costs.
D)Internal failure costs.
E)External failure costs.

Accepted Answer

Rework costs incurred before shipment of product are considered internal failure costs, as they are a result of defects or errors found during the production process.

Question 13

Inspection costs for reworked units would be classified, for Cost of Quality (COQ) reporting purposes, as:
A)Prevention costs.
B)Retention costs.
C)Appraisal costs.
D)Internal failure costs.
E)External failure costs.

Accepted Answer

Inspection costs for reworked units would be classified as Internal failure costs. Internal failure costs are costs associated with the detection, rejection, and correction of defects before the product is shipped to the customer.

Question 14

Cycle time efficiency is:
A)Defined as the ratio of time spent on value-added activities to the sum of time spent on value-added plus non-value-added activities.
B)Also referred to as process efficiency.
C)Defined as the ratio of throughput to resources used.
D)The ratio of throughput to the amount of product in backlog status.
E)Typically not part of a comprehensive framework for managing and controlling quality since it is a nonfinancial performance indicator.

Accepted Answer

Cycle time efficiency is defined as the ratio of time spent on value-added activities to the sum of time spent on value-added plus non-value-added activities. This means it measures how efficiently time is being used in a process by identifying the percentage of time that is actually adding value to the final product or service. Choice B, C, D, and E are not accurate definitions of cycle time efficiency.

Question 15

A graph that depicts successive observations of an operation taken at constant intervals is a(n):
A)Control chart.
B)Pareto diagram.
C)Histogram.
D)Ishikawa diagram.
E)Cause-and-effect diagram.

Accepted Answer

A control chart is specifically designed to track and monitor the performance of a process over time, typically through a series of successive observations taken at constant intervals. It is used to identify any variation or trends in the data, and to determine whether the process is within acceptable limits or needs to be adjusted. The other options listed are different types of graphical tools that are used for different purposes.

Question 16

In a Cost of Quality (COQ) reporting framework, scrap costs because of quality failure would be classified as:
A)Prevention costs.
B)Salvage costs.
C)Appraisal costs.
D)Internal failure costs.
E)External failure costs.

Accepted Answer

Scrap costs due to quality failure are classified as internal failure costs since they occur when a defective product is produced and must be scrapped or reworked internally. Prevention costs are costs incurred to prevent defects while appraisal costs are costs incurred to detect defects. Salvage costs are associated with the recovery of value from scrap or defective products. External failure costs occur when a defective product reaches the customer and results in things like warranty claims, returns or loss of brand trust.

Question 17

In a Cost of Quality (COQ) report, test equipment maintenance costs would be classified as:
A)Prevention costs.
B)Retention costs.
C)Appraisal costs.
D)Internal failure costs.
E)External failure costs.

Accepted Answer

Maintenance costs for test equipment are classified as appraisal costs because they are associated with activities to ensure that products or services meet quality standards before they reach the customer. This includes costs related to the inspection and testing of products.

Question 18

In a Cost-of-Quality (COQ) reporting framework, the "cost of nonconformance" includes:
A)Prevention costs and appraisal costs.
B)Internal failure costs and external failure costs.
C)Prevention costs and internal failure costs.
D)Appraisal costs, internal failure costs, and external failure costs.
E)Prevention costs and external failure costs.

Accepted Answer

The cost of nonconformance refers to the costs incurred as a result of failing to meet quality standards, and includes internal failure costs (such as rework and scrap) and external failure costs (such as customer complaints and warranty claims). It does not include prevention costs (costs incurred to prevent defects in the first place) or appraisal costs (costs incurred to evaluate and measure quality). Therefore, the best choice is B.

Question 19

In a Cost of Quality (COQ) report, costs to acquire and install training equipment would be classified as:
A)Prevention costs.
B)Retention costs.
C)Appraisal costs.
D)Internal failure costs.
E)External failure costs.

Accepted Answer

Costs to acquire and install training equipment fall under prevention costs, which are costs associated with preventing defects from occurring in the first place. These costs are incurred to ensure that operations are performed correctly the first time, thus preventing the occurrence of defects.

Question 20

For Cost of Quality (COQ) reporting purposes, materials inspection costs would be classified as:
A)Prevention costs.
B)Retention costs.
C)Appraisal costs.
D)Internal failure costs.
E)External failure costs.

Accepted Answer

Materials inspection costs fall under the category of appraisal costs, which are costs incurred to determine the state of conformance of products, materials, or processes. Prevention costs are incurred to prevent defects from occurring, retention costs are for retaining defective products until they are fixed, internal failure costs are incurred when defects are found before the product is delivered to the customer, and external failure costs are incurred when defects are found after the product is delivered to the customer.

Quiz 17: The Management and Control of Quality

Costs incurred as a result of poor quality found through appraisal prior to delivery of the product to the customer are, in a Cost-of-Quality (COQ) reporting framework, considered:

For Cost of Quality (COQ) reporting purposes, contribution margin of canceled sales orders due to quality deficiency would be classified as:

In a typical Cost of Quality (COQ) report, instructor fees for quality training would be classified as:

All of the following are examples of internal nonfinancial quality indicators except:

The "cost of conformance" in a Cost-of-Quality reporting system includes:

Which of the following is not an external nonfinancial measure of quality?

A graphical representation of the variation in a given set of data is a(n) :

In a Cost of Quality (COQ) report, sales returns and allowances due to quality deficiency would be classified as:

In a Cost of Quality (COQ) framework, warranty costs are properly classified as:

In a Cost-of-Quality (COQ) reporting framework, costs incurred in conjunction with the measurement and analysis of data to ascertain conformity of products and services to specification are properly classified as:

Which of the following statements about nonfinancial indicators of quality is not true?

In a Cost of Quality (COQ) framework, rework costs incurred before shipment of product are considered:

Inspection costs for reworked units would be classified, for Cost of Quality (COQ) reporting purposes, as:

Cycle time efficiency is:

A graph that depicts successive observations of an operation taken at constant intervals is a(n) :

In a Cost of Quality (COQ) reporting framework, scrap costs because of quality failure would be classified as:

In a Cost of Quality (COQ) report, test equipment maintenance costs would be classified as:

In a Cost-of-Quality (COQ) reporting framework, the "cost of nonconformance" includes:

In a Cost of Quality (COQ) report, costs to acquire and install training equipment would be classified as:

For Cost of Quality (COQ) reporting purposes, materials inspection costs would be classified as: