Question 1

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

The answer of When preparing the report to analyze a...

Question 2

Internal failure costs are costs incurred ________.
A) to detect poor-quality materials, goods, or services
B) when the company corrects poor-quality goods or services before delivery to customers
C) after the company delivers poor-quality goods or services to customers and then has to make things right with the customer
D) to avoid poor-quality goods or services

Accepted Answer

Internal failure costs are costs incurred when the company corrects poor-quality goods or services before delivery to customers. These costs include rework, scrap, repair, and inspection costs.

Question 3

Costs incurred in customer service are categorized as ________.
A) prevention costs
B) appraisal costs
C) internal failure costs
D) external failure costs

Accepted Answer

Costs incurred in customer service are considered external failure costs, as they arise due to the failure of a product or service to meet customer expectations, resulting in complaints, returns, and refunds. Examples of such costs include customer support staff salaries, website maintenance costs, shipping and return costs, and replacement product costs.

Question 4

Quality management systems emphasize external failure costs.

Accepted Answer

Quality management systems focus on preventing defects and minimizing internal failure costs, rather than just addressing external failure costs after the product or service has reached the customer.

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 (QMS) are designed to help organizations consistently meet customer and regulatory requirements and continuously improve their processes and products/services. QMS focus on various aspects such as customer satisfaction, quality control, risk management, and performance evaluation to ensure that the organization produces quality products and services.

Question 6

Which of the following is most likely to be categorized as an external failure cost?
A) the cost of testing a product before shipment
B) the cost of machinery maintenance to avoid breakdowns during production
C) the cost of lost future sales after a customer finds a defect in a product
D) the cost of inspection of materials to be used in production

Accepted Answer

External failure costs are costs associated with defects or issues being discovered by the customer after the product has already been shipped or sold. The cost of lost future sales after a customer finds a defect in a product is a clear example of an external failure cost.

Question 7

Appraisal costs are costs incurred ________.
A) to avoid poor-quality goods or services
B) to detect poor-quality materials, goods, or services
C) when the company corrects poor-quality goods or services before delivery to customers
D) after the company delivers poor-quality goods or services to customers and then has to make things right with the customer

Accepted Answer

Appraisal costs are incurred to detect poor-quality materials, goods, or services before they are delivered to customers. These costs include inspections, testing, and other quality control measures to ensure that the product or service meets specified standards. By detecting and addressing quality problems early on, companies can avoid the much greater costs of correcting poor-quality goods or services after they have been delivered to customers (option D). In addition, appraisal costs help to build quality into the production process and improve overall quality performance, which can lead to greater customer satisfaction and lower costs over time. Although the goal of appraisal costs is to prevent poor-quality goods or services (option A), this is not the primary motivation behind them. Rather, they are a necessary investment in quality control and assurance. Finally, while correcting poor-quality goods or services before delivery (option C) is certainly desirable, this is not a definition of appraisal costs, which specifically refer to the costs of detecting poor-quality materials, goods, or services through quality control measures.

Question 8

Which of the following is an example of internal failure costs?
A) costs incurred for the evaluation of the quality of suppliers' processes
B) costs incurred in the inspection at various stages of production
C) cost incurred for the reworking of substandard products
D) cost incurred as warranty expenses

Accepted Answer

Internal failure costs refer to costs incurred due to defects found before the product is delivered to the customer. Cost incurred for the reworking of substandard products falls under this category. Option A refers to appraisal costs, option B refers to prevention costs, and option D refers to external failure costs.

Question 9

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 often leads to increased costs due to higher rates of product defects and necessary repairs. It can also result in decreased revenues due to customer dissatisfaction and reduced repeat business. Customer awareness of quality problems and increased product repairs are both common consequences of poor quality production.

Question 10

What is a quality management system? What is the common factor in all quality management systems?

Accepted Answer

The answer of What is a quality management system? What...

Question 11

Businesses should invest up front in internal and external failure costs to reduce prevention and appraisal costs.

Accepted Answer

Businesses should invest up front in prevention and appraisal costs to reduce internal and external failure costs, as this approach is more cost-effective and improves quality.

Question 12

When preparing the report to analyze a proposed quality improvement program, which of the following costs are included in the total costs of not undertaking the quality improvement program?
A) preventive maintenance
B) sales returns
C) inspection of finished goods
D) total appraisal costs

Accepted Answer

Sales returns are included in the total costs of not undertaking the quality improvement program because they represent a direct consequence of quality issues with the products sold to customers. Costs like preventive maintenance, inspection of finished goods, and total appraisal costs are associated with efforts to improve or ensure quality, not costs resulting from failing to undertake quality improvements.

Question 13

A company is considering spending the following on a new quality improvement program:
 $$\begin{array} { l l } 
\text { Inspect raw materials } & \$ 123,000 \
\text { Reengineer to improve product quality } & 760,000 \
\text { Inspect finished goods } & 150,000 \
\text { Preventive maintenance of equipment } & 140,000
\end{array}$$ The company expects this quality program to reduce costs by the following amounts:
 $\begin{array}{ll}
\text { Avoid lost profits due to unhappy customers } & \$ 910,000 \
\text { Fewer sales returns } & 65,000 \
\text { Decrease the cost of rework } & 155,000 \
\text { Lower warranty costs } & 54,000
\end{array}$
 Group each cost under the four categories of quality management systems. Comment whether the company should undertake the quality improvement program.

Accepted Answer

The answer of A company is considering spending the following...

Question 14

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, customer satisfaction, or business efficiency. The other options mentioned (increasing inspections, completing repairs, ignoring costs and benefits) may be part of a quality management system but are not the overarching goal.

Question 15

Quality costs are easy to measure.

Accepted Answer

Quality costs can be difficult to measure as they involve both direct and indirect costs such as inspection, prevention, and appraisal costs. Additionally, there may be intangible costs such as the cost of lost business due to poor quality.

Question 16

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, as these are the costs that result from defects and failures that occur both within and outside of the organization. Prevention and appraisal costs are not relevant to the costs of continuing without a quality improvement program, as these are costs that are incurred to prevent or detect defects in the first place, and would still need to be incurred even with a quality improvement program in place. Internal failure costs are also not as relevant as external failure costs, as the latter are typically larger and more visible to customers and stakeholders.

Question 17

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 aim to improve a business's performance by ensuring that quality products or services are provided to customers. This is the common factor among all quality management systems.

Question 18

The costs incurred in the inspection of final products or services is an example of a(n) ________.
A) prevention cost
B) appraisal cost
C) internal failure cost
D) external failure cost

Accepted Answer

The inspection of final products or services is a type of appraisal cost. Appraisal costs are expenses incurred to detect defects or nonconformance in products or processes. These costs are typically associated with evaluating, testing, and measuring products or services to ensure that they meet specific quality standards.

Question 19

The costs incurred in training employees is an example of a(n) ________.
A) external failure cost
B) internal failure cost
C) prevention cost
D) appraisal cost

Accepted Answer

The costs incurred in training employees is an example of a prevention cost, which is a cost incurred to prevent defects or problems from occurring in the first place.

Question 20

________ are costs incurred after the company delivers poor-quality goods or services to customers and then has to make things right with the customer.
A) Prevention costs
B) Appraisal costs
C) Internal failure costs
D) External failure costs

Accepted Answer

External failure costs refer to costs incurred after poor-quality goods or services are delivered to customers and the company has to make things right with the customer. This includes costs such as refunds, returns, warranty repairs, and lost sales due to damage to the company's reputation.

Quiz 19: Cost Management Systems: Activity-Based Just-In-Time

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?

Internal failure costs are costs incurred ________.

Costs incurred in customer service are categorized as ________.

Quality management systems emphasize external failure costs.

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

Which of the following is most likely to be categorized as an external failure cost?

Appraisal costs are costs incurred ________.

Which of the following is an example of internal failure costs?

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

What is a quality management system? What is the common factor in all quality management systems?

Businesses should invest up front in internal and external failure costs to reduce prevention and appraisal costs.

When preparing the report to analyze a proposed quality improvement program, which of the following costs are included in the total costs of not undertaking the quality improvement program?

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

Quality costs are easy to measure.

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?

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

The costs incurred in the inspection of final products or services is an example of a(n) ________.

The costs incurred in training employees is an example of a(n) ________.

________ are costs incurred after the company delivers poor-quality goods or services to customers and then has to make things right with the customer.