The costs of quality that are incurred in detecting units of product that do not conform to product specifications are referred to as: A. Prevention costs. B. Appraisal costs. C. Rework costs. D. Failure costs. Explanation: Appraisal activities include inspection and testing. Appraisal costs (such as test equipment maintenance and destructive testing) are incurred to […]

Listed below are costs of quality that a manufacturing company has incurred throughout its operations. The U.S. dollar amount of the costs of quality classified as prevention costs for the manufacturing firm would be: A. US$643,000 B. US$701,000 C. US$736,000 D. US$768,000 Explanation: Prevention costs are incurred to prevent defects. Examples are the costs of […]

Which of the following costs of quality is a failure cost? A. Systems development costs. B. Costs of inspecting in-process items. C. Contract penalty for delivery of nonconforming goods. D. Costs of quality circles. Explanation: Failure costs are incurred after defective output has been removed from production. A contract penalty for faulty goods is an […]

The four categories of costs associated with product quality costs are: A. External failure, internal failure, prevention, and carrying. B. External failure, internal failure, prevention, and appraisal. C. External failure, internal failure, training, and appraisal. D. Warranty, product liability, training, and appraisal. Explanation: Prevention costs are incurred to prevent defects. Appraisal costs are incurred to […]

The cost of scrap, rework, and tooling changes in a product quality cost system is categorized as a (n): A. Training cost. B. External failure cost. C. Internal failure cost. D. Prevention cost. Explanation: Internal failure costs are incurred when detection of defective products occurs before shipment. Examples of internal failure costs are scrap, rework, […]

The management and employees of a large household goods moving company believe that it if became nationally known as adhering to total quality management and continuous improvement, one result would be an increase in the company’s profits and market share. What should the company focus onto achieve quality more economically? A. Appraisal costs. B. Prevention […]

A company with many branch stores has decided to use its best-performing store as a benchmark organization for the purpose of analyzing the accuracy and reliability of branch store financial reporting. Which one of the following is the most likely measure to be included in a financial benchmark? A. High turnover of employees. B. High […]

Quality control circles are now used all over the world. The circles typically consist of a group of five to ten employees who meet regularly. The primary goal of these circles is to: A. Improve the quality of leadership in the organization. B. Tap the creative problem-solving potential of every employee. C. Improve communications between […]

An example of an internal nonfinancial benchmark is: A. The labor rate of comparably skilled employees at a major competitor’s plant. B. The average actual cost per pound of a specific product at the company’s most efficient plant. C. A US $50,000 limit on the cost of employee training programs at each of the company’s […]

Which of the following criteria would be most useful to a sales department manager in evaluating the performance of the manager’s customer-service group? A. The customer is always right. B. Customer complaints should be processed promptly. C. Employees should maintain a positive attitude when dealing with customers. D. All customer inquiries should be answered within […]