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Exam 16: Cost of Quality

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Question 1

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Which of the following would be classified as an internal failure cost on a quality cost report?

A) Rework labor and overhead.
B) Cost of field servicing and handling complaints.
C) Technical support provided to suppliers.
D) Lost sales arising from a reputation for poor quality.

E) A) and D)
F) A) and C)

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Question 2

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Which of the following would be classified as an external failure cost on a quality cost report?

A) Depreciation of test equipment.
B) Repairs and replacements beyond the warranty period.
C) Supplies used in testing and inspection.
D) Re-entering data because of keying errors.

E) B) and D)
F) B) and C)

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Question 3

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(Appendix 1A) Eaglin Company's quality cost report is to be based on the following data: -What would be the total external failure cost appearing on the quality cost report?

Galben Company's quality cost report is to be based on the following data: $\begin{array}{lr}\text {Quality data gathering, analysis, and reporting. }&\$38,000\\\text {Supervision of testing and inspection activities. }&\$45,000\\\text {liability arising from defective products }&\$30,000\\\text {Technical support provided to suppliers. }&\$39,000\\\text {Disposal of defective products. }&\$72,000\\\text {Depreciation of test equipment }&\$55,000\\\text {Downtime caused by quality problems. }&\$96,000\\\text { Test and inspection of in-process goods. }&\$69,000\\\text { Cost of field servicing and handling complaints}&\$52,000\\\end{array}$ Required: Prepare a Quality Cost Report in good form with separate sections for prevention costs,appraisal costs,internal failure costs,and external failure costs.

Which of the following would be classified as an appraisal cost on a quality cost report?

The four categories of quality costs in a quality cost report are:

(Appendix 1A) Fackler Company's quality cost report is to be based on the following data: -What would be the total prevention cost appearing on the quality cost report?

Harwood Company's quality cost report is to be based on the following data: Required: Prepare a Quality Cost Report in good form with separate sections for prevention costs,appraisal costs,internal failure costs,and external failure costs.

An increase in appraisal costs in a quality improvement program would usually have the following initial effects on internal and external failure costs:

Which of the following would be classified as an external failure cost on a quality cost report?

(Appendix 1A) Eaglin Company's quality cost report is to be based on the following data: -What would be the total prevention cost appearing on the quality cost report?

Which of the following would be classified as an appraisal cost on a quality cost report?

(Appendix 1A) Fackler Company's quality cost report is to be based on the following data: -What would be the total internal failure cost appearing on the quality cost report?

An increase in appraisal costs will usually result in an increase in:

Which of the following would be classified as an appraisal cost on a quality cost report?

The most effective way to minimize quality costs while maintaining high quality is to avoid having quality problems in the first place.This is the reason for incurring appraisal costs.

Which of the following would be classified as an external failure cost on a quality cost report?

Which of the following would be classified as a prevention cost on a quality cost report?

(Appendix 1A) Eagleson Company's quality cost report is to be based on the following data: -What would be the total appraisal cost appearing on the quality cost report?

In preparing a quality cost report,the cost of employee's time spent in quality circles is part of: