Acctg chap 17

Given k (the cost coefficient in a Taguchi quality loss function) = $250,000, total quality cost (TQC) = $1,000, and T (the target value of the quality characteristic) = 0.50, what is the estimated quality loss, L(x), for x = 0.48? Multiple choice question. $5,000 $20 $250 $100

$100

Quality costs (losses) in a Taguchi Quality Loss Function (QLF) include ______. Multiple select question. reduced inventory customer dissatisfaction increased warranty repair costs loss of market share

customer dissatisfaction increased warranty repair costs loss of market share

In statistics, the Greek letter ___ stands for standard deviation.

sigma

Assume a company has determined that no customer will accept shower door glass deviating more than 0.04 inches in thickness and that the target thickness is 0.5 inches. The estimated cost to the firm for each rejection is $750. If the actual thickness of a unit is 0.48, the estimated quality cost for this unit is ______. Multiple choice question. $120.00 $750.00 $172.80 $187.50

$187.50

The formula for k, the cost coefficient in a Taguchi Quality Loss Function (QLF), can be used to set the tolerance level (range) for a given operation. Specifically, tolerance = ______. Multiple choice question. (k÷total quality cost)1/2 (total quality cost÷k)2 (k÷total quality cost)2 (total quality cost÷k)1/2

(total quality cost÷k)1/2

In the comprehensive framework for managing and controlling quality (such as the framework presented in Chapter 17), non-financial quality-related performance metrics/measures include ______. Multiple select question. internal measures (e.g., defect rates) internal and external failure costs prevention and appraisal costs external measures (e.g., customer satisfaction)

-internal measures (e.g., defect rates) -external measures (e.g., customer satisfaction)

Within the context of Chapter 17, the term "quality" ______. is the gap between customer expectations and actual performance of a product or service means the total level of customer satisfaction with the organization's products or services can be decomposed into features and price (cost) has a different meaning for cost leadership firms than it does for product differentiation firms

-is the gap between customer expectations and actual performance of a product or service -means the total level of customer satisfaction with the organization's products or services

Key characteristics of the comprehensive framework for managing and controlling quality (as presented in Chapter 17) include ______. Multiple select question. monitoring defects a financial analysis of quality-related spending & investments exclusion of financial analysis a focus on internal processes only

-monitoring defects -a financial analysis of quality-related spending & investments

Given a cost to a firm of $275 if a firm repairs a product before it is shipped to a customer and a k (the cost coefficient in a Taguchi quality loss function) value of $1,500,000, the tolerance for the operation rounded to 5 decimal places is ____

0.01354

Given: T0 (current [or customer defined] tolerance) = 0.50; C1 (manufacturer's cost to rework or scrap a unit before shipping to a customer) = $100, and C2 (the quality cost if the product fails to meet customer specifications) = $1,000, Tolerance = ? (Note: use the alternative equation approach.) Multiple choice question. 0.158 (rounded) 0.20 0.05 (rounded) 0.50

0.158 (rounded)

In the Cost-of-Quality framework presented in the chapter, total quality-related costs are divided into four separate categories: prevention,_____ , internal _______ and ______ _____________ . (Enter only one word per blank.)

Blank 1: appraisal Blank 2: failure Blank 3: external Blank 4: failure

Prevention and appraisal costs are costs of ____ , while internal failure costs and external failure costs are costs of ___

Blank 1: conformance Blank 2: nonconformance

The Comprehensive Framework for Managing and Controlling Quality contains a number of _____ _____ designed to inform future decisions and to support an organization's overall goal of continuous improvement. (Enter only one word per blank.)

Blank 1: feedback Blank 2: loops

It is assumed the customer will accept any value within the tolerance range in the ____ ______ approach to setting quality expectations (i.e., product tolerance)

Blank 1: goalpost Blank 2: conformance

Six Sigma, as a management approach, is based on a problem-solving methodology referred to as ______. Multiple choice question. Define, Analyze, Improve, and Control (DAIC) Measure, Analyze, Improve, and Control (MAIC) Define, Measure, Analyze, Improve, and Control (DMAIC) Define, Control, Improve, and Redefine (DCIR)

Define, Measure, Analyze, Improve, and Control (DMAIC)

True or false: The development and implementation of a comprehensive framework for managing and controlling quality rests largely on management accountants within the organization.

False

An overall strategy to accelerate improvements and to achieving unprecedented performance levels by focusing on characteristics that are critical to customers and identifying and eliminating causes of errors or defects in processes is ______. Multiple choice question. absolute quality conformance goalpost conformance total operations management Six Sigma

Six Sigma

An alternative formulation of setting Tolerance (i.e., the range of acceptable values for a quality characteristic) is available given the following three components: T0 = current (or customer defined) tolerance; C1 = manufacturer's cost to rework or scrap a unit before shipping to a customer, and C2 = the quality cost if the product fails to meet customer specifications. Thus, tolerance = ______. Multiple choice question. T0 × (C1÷C2)1/2 T0÷(C1÷C2)1/2 T0 × (C1÷C2)2 (C1÷C2)1/2÷T0

T0 × (C1÷C2)1/2

Let TQC = the total quality cost (out-of-pocket cost + opportunity cost) due to deviation of the quality characteristic from its targeted value. In a Taguchi Quality Loss Function (QLF), k (the cost coefficient) can be estimated as ______. Multiple choice question. TQC ÷ (Tolerance Allowed) TQC × (Tolerance Allowed)2 TQC ÷ (Tolerance Allowed)2 (Tolerance Allowed)2÷TQC

TQC ÷ (Tolerance Allowed)2

For firms desiring to attain long-term profitability and customer satisfaction, ____ conformity may be the better approach.

absolute

The approach to setting quality expectations as a single, targeted value is referred to as ______. Multiple select question. Six Sigma goalpost conformance the quality range approach absolute quality conformance the robust quality approach

absolute quality conformance the robust quality approach

In a cost of quality (COQ) reporting framework, costs incurred to detect poor-quality outputs are ______ costs. Multiple choice question. external failure costs appraisal internal failure prevention

appraisal

A primary benefit (or advantage) of including nonfinancial performance measures as part of a comprehensive framework for managing and controlling quality costs is that these measures ______. do not have to be shared with operating personnel are leading indicators of financial performance include the cost of conformance-quality include the cost of non-conformance quality

are leading indicators of financial performance

Another name for relevant costs is ___ costs

avoidable

Relevant costs for guiding quality-related spending include ______. Multiple select question. both out-of-pocket and opportunity costs an allocated share of existing administrative support costs all avoidable costs associated with each decision alternative being evaluated future costs that differ between decision alternatives

both out-of-pocket and opportunity costs all avoidable costs associated with each decision alternative being evaluated future costs that differ between decision alternatives

In a cost of quality (COQ) reporting framework, internal failure costs generally include ______. Multiple select question. regular (normal) maintenance cost on manufacturing equipment contribution margin lost (opportunity cost) from units not produced because of time spent on defective units employee training programs designed to ensure proper manufacturing and delivery of products and services costs incurred to expedite manufacturing operations due to time spent on rework and product repair activities

contribution margin lost (opportunity cost) from units not produced because of time spent on defective units costs incurred to expedite manufacturing operations due to time spent on rework and product repair activities

Appraisal costs in a cost of quality (COQ) reporting framework generally include ______. Multiple select question. costs incurred to expedite manufacturing operations due to time spent on repair or rework activities costs associated with field-testing of products at the site of the customer the cost (e.g., opportunity loss) associated with unplanned machine downtime costs incurred to inspect work-in-process inventory and finished goods inventory

costs associated with field-testing of products at the site of the customer costs incurred to inspect work-in-process inventory and finished goods inventory

In a comprehensive framework for managing and controlling quality (such as the one depicted in Chapter 17) the role of the customer is ______. Multiple select question. critical to the outward (i.e., customer) based view of the process the cornerstone of the entire process of managing and controlling quality minimized because of the decidedly inward focus not important because measures are based on what the organization thinks is appropriate

critical to the outward (i.e., customer) based view of the process the cornerstone of the entire process of managing and controlling quality

Quality costs (losses) in a Taguchi Quality Loss Function (QLF) include ______. Multiple select question. customer dissatisfaction loss of market share reduced inventory increased warranty repair costs

customer dissatisfaction loss of market share increased warranty repair costs

The cornerstone of the modern comprehensive framework for managing and controlling quality presented in Chapter 17 is ______. the inclusion of nonfinancial performance indicators ensuring measures span the entire value chain customer expectations reporting quality cost information

customer expectations

The key assumption in the use of goalpost conformance standards is ______. Multiple choice question. deviations from the quality standard (targeted value) cannot be tolerated the underlying quality loss function (QLF), from the standpoint of the customer, is quadratic in nature customers will accept any output/product whose quality characteristic falls within a specified range

customers will accept any output/product whose quality characteristic falls within a specified range

Benefits of investing in a just-in-time (JIT) production approach, to improve overall quality, include ______. Multiple select question. decreased cycle times increased spending on rework reduced inventory obsolescence increased contribution margin increased storage activity costs

decreased cycle times reduced inventory obsolescence increased contribution margin

The Taguchi Quality Loss Function (QLF) ______. Multiple select question. assumes that the firm incurs no quality or failure cost if all quality measures fall within specified limits depicts the relationship between quality costs and level of deviation from target quality assumes a linear quality loss function is consistent with absolute conformance standards

depicts the relationship between quality costs and level of deviation from target quality is consistent with absolute conformance standards

As a statistical term, Six Sigma refers to quality ______. Multiple choice question. defined as any output within upper and lower control limits equal to no more than 6 defects per million units of output equal to no more than 3.4 defects per million units of output equal to no more than 0.001 defects per million units of output

equal to no more than 0.001 defects per million units of output

In a cost of quality (COQ) framework, costs associated with defective/poor-quality outputs detected after being delivered to the customer are typically classified as ______ costs. Multiple choice question. prevention internal failure external failure appraisal

external failure

n a typical cost of quality (COQ) report, the cost of product recalls is reported as a(n) ______ cost. Multiple choice question. external failure prevention appraisal internal failure

external failure

An approach to setting quality expectations as a range around a targeted performance level (e.g., thickness of sheet metal) is ______. Multiple choice question. a Taguchi Quality Loss Function (QLF) total quality management (TQM) goalpost conformance absolute quality conformance Six Sigma

goalpost conformance

A primary role of operating managers, in terms of the comprehensive framework for managing and controlling quality (as presented in Chapter 17), is to ______. Multiple choice question. determine the core strategy of the business identify and analyze quality-related problems develop appropriate recording systems to support the framework ensure timely preparation of periodic performance reports regarding quality-related initiatives

identify and analyze quality-related problems

The recommended scope (or breadth) of a comprehensive system for managing and controlling quality (such as the framework presented in Chapter 17) should ______. Multiple choice question. be focused on the production function include only key players in the external value chain be focused on the marketing function include all areas across the value chain

include all areas across the value chain

Costs associated with defective processes or defective products detected before delivery to customers are, in a cost of quality (COQ) reporting framework, considered ______ costs. Multiple choice question. prevention external failure internal failure appraisal

internal failure

Costs of non-conformance consist of ______ costs. Multiple choice question. internal failure and external failure prevention and external failure prevention and internal failure prevention and appraisal

internal failure and external failure

Let T = the targeted value of a quality characteristic, x = the observed value of the quality characteristic, and k = the cost coefficient (based on the firm's costs of failure). The loss, L(x) from having an observed quality characteristic x can be estimated by ______. L(x)÷(Tolerance allowed)2 k(x - T)2 (x - T)2÷k (x - T)2

k(x - T)2

Quality costs (losses) in a Taguchi Quality Loss Function (QLF) include ______. Multiple select question. loss of market share customer dissatisfaction reduced inventory increased warranty repair costs

loss of market share customer dissatisfaction increased warranty repair costs

Benefits of investing in a just-in-time (JIT) production approach, to improve overall quality, include ______. Multiple select question. only reductions in out-of-pocket costs because these are the only ones that result from actual events or transactions. lower financing costs associated with reductions of inventory holdings significant cost savings due to higher-quality and continuously improving processes increased production (manufacturing) cycle times only financial factors, such as increased sales or market share possibly higher selling prices for products of improved quality

lower financing costs associated with reductions of inventory holdings significant cost savings due to higher-quality and continuously improving processes possibly higher selling prices for products of improved quality

Cost-of-Quality (COQ) reports are designed to ______. Multiple select question. motivate continuous improvement in the overall Cost of Quality (COQ) report to management firm-wide performance in terms of nonfinancial measures provide a baseline against which the impact of quality-improvement investments can be measured inform management of the total magnitude of quality-related costs

motivate continuous improvement in the overall Cost of Quality (COQ) provide a baseline against which the impact of quality-improvement investments can be measured inform management of the total magnitude of quality-related costs

Six Sigma can be thought of as a management process. Suggested keys to a successful Six Sigma implementation include ______. Multiple select question. ongoing employee training appropriate levels of leadership and resource support incorporation of a reward system judicious employee layoffs as needed focus on complicated and difficult projects

ongoing employee training appropriate levels of leadership and resource support incorporation of a reward system

Relevant quality-related costs include both out-of-pocket costs and ____ costs.

opportunity

In a Taguchi Quality Loss Function (QLF) the total cost of deviation from the quality standard includes ______. Multiple select question. opportunity costs inventory holding costs sunk costs gain on disposal rework

opportunity costs inventory holding costs rework

Costs incurred to keep quality defects (i.e., poor quality) from occurring are classified as ______ costs.

prevention

Equipment maintenance cost is a(n) ______ cost. Multiple choice question. prevention external failure appraisal internal failure

prevention

In a cost of quality (COQ) reporting framework, one example of ____ costs is the cost of establishing and operating quality circles.

prevention

In a cost of quality (COQ) reporting framework, reductions in all three remaining categories should result from increased spending on ____

prevention

Some companies choose to classify inspection costs associated with incoming materials as part of ____ costs

prevention

The least expensive and easiest costs of quality for management to control are ____ costs.

prevention

Inspection may be classified as a(n) ______ cost. Multiple select question. internal failure external failure prevention appraisal

prevention appraisal

Select all that apply In the comprehensive framework for managing and controlling quality (such as the framework presented in Chapter 17), the categories of quality costs are ______. Multiple select question. prevention external failure appraisal human resource rework internal failure

prevention external failure appraisal internal failure

Key characteristics of the comprehensive framework for managing and controlling quality (as presented in Exhibit 17.3) include ______. Multiple select question. prominence of the customer prominence of the managerial accounting function in the overall process nonfinancial performance indicators

prominence of the customer nonfinancial performance indicators

The most important step to ensure the success of Six Sigma project is ______. Multiple choice question. provide ongoing training break up difficult projects implement a reward system provide necessary leadership and resources judiciously select early projects

provide necessary leadership and resources

Making management aware of the magnitude of these costs, motivating continuous improvements and providing a measurement baseline are all purposes of reporting ____ costs

quality

In terms of goalpost conformance quality standards, the range around the targeted performance level is referred to as the ______. Multiple choice question. absolute conformance standard quality goal quality tolerance Six Sigma range

quality tolerance

A small group of employees from the same work area that meets regularly to identify and solve work-related problems, and to implement and monitor solutions is a(n) ____ _____

quality, circle

The absolute or _____ quality approach to setting quality expectations aims for all products or services to meet the target value exactly, with no variation.

robust

Prevention costs include ______. Multiple select question. supplier-assurance costs costs incurred to test and inspect incoming materials the cost of internal training programs the cost of preparing, distributing, and updating employee handbooks and manuals re-inspection and retest costs

supplier-assurance costs the cost of internal training programs the cost of preparing, distributing, and updating employee handbooks and manuals

The primary reason for including feedback loops throughout the comprehensive framework for managing and controlling quality presented in Chapter 17 is to ______. Multiple choice question. reduce the number of individuals or departments involved in the total quality management (TQM) process identify recording errors for both financial and nonfinancial quality indicators support the organization's overall goal of continuous improvement ensure a proper (i.e., effective) initial implementation of the framework

support the organization's overall goal of continuous improvement

Knowledge of business processes is critical to implementing a comprehensive framework for managing and controlling quality because ______. Multiple choice question. accountants are responsible for developing quality measures the process of managing and controlling quality cuts across various subunits and managers within the organization most quality-related activity occurs at the production stage of the internal value chain only a few key individuals are involved in the framework's development

the process of managing and controlling quality cuts across various subunits and managers within the organization

The underlying assumption of a Taguchi quality loss function (QLF) is ______. Multiple select question. there is a linear relationship between quality cost incurred and degree of departure from targeted value of the quality characteristic the underlying cost (loss) function is best represented as a quadratic function the total quality cost (or loss) grows larger as the variation from targeted value increases every time the departure from targeted value of the quality characteristic doubles, the loss (quality cost) quadruples

the underlying cost (loss) function is best represented as a quadratic function the total quality cost (or loss) grows larger as the variation from targeted value increases every time the departure from targeted value of the quality characteristic doubles, the loss (quality cost) quadruples

An acceptable range of a quality characteristic (such as thickness of sheet metal, in centimeters) is referred to as the product ___

tolerance

True or false: Activity and process decisions (for example, factory layout) are examples of quality-related investments.

true