Chapter 4
29. Which is the best stage in the Value Chain to prevent quality problems? a. Design b. Production c. Marketing d. Research & Development
A
12. Many contracts require ISO 9000 certification. The ISO 9000 are international standards for a. organization management. b. operations management. c. quality management. d. financial management.
C
58. Which of the following is a cost incurred when the firm discovers nonconforming products and services before delivery to customers? a. prevention costs. b. appraisal costs. c. internal failure costs. d. external failure costs.
C
13. The ISO 14000 focuses on communicating the financial impact of a. make versus buy decisions. b. worker productivity. c. outsourcing. d. environmental issues.
D
91. Which of the following measures of time indicate the speed and reliability with which organizations supply products and services to customers? a. Strategic b. Support c. Intelligent d. Operational
D
96. The performance evaluation tools that assist in evaluating performance by integrating financial and nonfinancial measures include which of the following? a. PERT chart and balanced scorecard. b. balanced scorecard and Pareto chart. c. Pareto chart and control chart. d. balanced scorecard.
D
22. Which of the following statements is true concerning the critical success factors dealing with quality? a. Quality means giving the customer what the firm promised; it is the degree to which the customer is satisfied. b. Quality is the price of a product which must cover its costs or the organization will no longer make the product. c. Quality can be defined as the expectations the customer has about all aspects, both tangible and intangible, of the product purchase and use. d. None of the answers is correct.
A
25. Which critical success factor relates to the expectations the customer has about all aspects, both tangible and intangible, of the product's purchase and use? a. Service b. Quality c. Quantity d. Cost
A
31. Which is the best stage in the Value Chain to deal with unhappy customers? a. Customer Service b. Marketing c. Distribution d. Research & Development
A
32. Which of the following is an example of appraisal costs? a. Field testing b. Inspection of incoming materials c. Warranty repairs d. Quality engineering
A
45. Which of the following represent two costs of controlling and improving quality? 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 external failure costs.
A
48. Companies that track quality costs and use the information to improve operations tend to see a a. long-run decline in total costs of quality. b. short-run decline in total costs of quality. c. no decline in total costs of quality. d. short-run decline followed by a long-term increase in total costs of quality.
A
5. Significant differences between the "traditional view" of quality and the emerging "quality-based view" relate to which of the following? a. quality production, inspections, causes of defects, standards, purchasing, and customer focus. b. financial, internal business process, learning and growth, customer. c. total quality, smooth production flow, purchasing quality materials, well trained and flexible workforce, short customer-response times, backlog of orders. d. prevention costs, appraisal costs, internal failure costs, and external failure costs.
A
50. Which of the following statements is true? a. In the long run the price of a product must cover its costs or the organization will no longer make the product. b. In the long run the price of a product must cover its sunk costs or the organization will no longer make the product. c. In the long run the price of a product must cover its internal failure costs or the organization will no longer make the product. d. In the long run the price of a product must cover its external failure costs or the organization will no longer make the product.
A
51. Which of the following are the two costs of controlling quality? a. prevention costs and appraisal costs. b. appraisal costs and internal failure. c. internal failure and external failure costs. d. prevention costs and external failure costs.
A
53. Which statement is true concerning prevention costs? a. Prevention costs are incurred to prevent defects in the products or services being produced. b. Prevention costs are incurred to detect individual units of products that do not conform to specifications. c. Prevention costs are incurred when the firm discovers nonconforming products and services before delivery to customers. d. Prevention costs are incurred when the customers discover nonconforming products and services at delivery.
A
60. Trade-offs must be made in and among the prevention, appraisal, internal failure, and external failure costs in order to reduce total costs of quality over time. Over the long-term, what should the targeted level of defective units? a. Zero b. Over zero but less than 10 percent c. Over 10 percent but less than 25 percent d. Over 25 percent
A
80. Which of the following is a tool in quality control that defines the effect and list events that may be the cause of the problem? a. cause-and-effect analyses. b. Pareto charts. c. control charts. d. PERT charts.
A
85. Response time improvements often drive simultaneous improvements in quality and productivity. Analysts focus on which of the following aspects of time? a. new-product development time and operational measures of time. b. new-product research time and operational measures of time. c. new-product strategy time and operational measures of time. d. new-product research time and response measures of time.
A
9. When is a company is engaging in total quality management? a. When the company has instilled a quality culture into the organization. b. When the company's products are in conformity with quality specifications. c. When the company's products meet industry standards. d. When the company can effectively compete for a distinguished quality award.
A
98. How do many management accountants measure waste in the organization? a. By determining waiting time. b. By determining direct materials. c. By determining direct labor d. By determining manufacturing overhead.
A
Three Dog Bite Company: Warranty claims $ 170,000 Product liability lawsuits 200,000 Rework costs 600,000 Quality training 505,000 Inspection of incoming materials 900,000 Statistical process control 650,000 Waste 325,000 Field testing at customer sites 375,000 Total yearly sales $50,000,000 62. Refer to Three Dog Bite Company. What are the total appraisal costs? a. $ 375,000 b. $1,550,000 c. $1,275,000 d. $2,025,000
A
1. Which of the following prestigious, internationally renowned awards was created in Japan? a. The Baldrige Award. b. The Deming Prize. c. The ISO 9000 Award. d. The AMA Prize.
B
10. What is the traditional view of quality? a. There is never a trade-off between the cost of improving quality and maintaining the status quo. b. It may be cheaper to produce lower quality goods and have a minimum level of defective goods. c. Quality can and should always be improved. d. It is generally more costly to produce lower quality goods and have a minimum level of defective goods.
B
100. The time a company spends responding to customer requests which can be reduced by identifying the activities that consume the most resources and making them more efficient, and by identifying non-value-added activities, which the firm can eliminate, is called a. company response time. b. customer response time. c. rapid response time. d. vendor response time.
B
101. Activity-based management reduces customer response time by identifying the activities that consume the most resources and making them more efficient, and by identifying ________ activities, which the firm can eliminate. a. value-added b. non-value-added c. inefficient d. Ineffective
B
19. Which of the following is an example of performance measures used to measure customer satisfaction with quality? a. Number of Customers b. Customer satisfaction surveys c. Amount of purchases per customer d. Number of defective products per 1000 units produced
B
2. The annual award to Japanese companies created in 1950 by the Union of Japanese Scientists and Engineers that focuses on quality improvement is called the a. Baldrige Award. b. Deming Prize. c. ISO 9000 Award. d. UJSE Prize.
B
20. Which of the following is a measure developed by successful firms to focus on customer requirements and to assess performance based on service, quality, and cost? a. customer success factors. b. critical success factors. c. critical performance factors. d. customer performance factors.
B
26. Which critical success factor means giving the customer what the firm promised; it is the degree to which the customer is satisfied? a. Service b. Quality c. Quantity d. Cost
B
27. Which of the following statements concerning quality is true? a. Quality can be inspected into a product. b. Quality should be designed into a product. c. Quality is continual, once achieved. d. Quality means meeting management guidelines.
B
30. Which is the best stage in the Value Chain to identify quality problems? a. Research & Development b. Production c. Marketing d. Customer Service
B
33. Which of the following is an example of internal failure costs? a. Warranty repairs b. Reinspection / retesting c. machine inspection d. Inspection of incoming materials
B
36. Which of the following is not an example of prevention costs? a. Quality training b. End-process sampling c. Statistical process control d. Designing production processes
B
37. Which of the following is not an example of prevention costs? a. Procurement inspection b. Field testing c. Processing control d. Designing production processes
B
46. Which of the following costs result from failure to control and improve quality? 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 external failure costs.
B
54. Which statement is true concerning appraisal costs? a. Appraisal costs are incurred to prevent defects in the products or services being produced. b. Appraisal costs are incurred to detect individual units of products that do not conform to specifications. c. Appraisal costs are incurred when the firm discovers nonconforming products and services before delivery to customers. d. Appraisal costs are incurred when the customers discover nonconforming products and services at delivery.
B
69. What does a quality control chart reflect? a. The manager who is in charge on a particular day. b. Process variations that need to be analyzed. c. Which product is controlling the market. d. Which employee is to engage in strategic cost management techniques.
B
77. Management tools which provide diagnostic signals and identify potential causes of a problem(s) are called a. control charts. b. cause-and-effect charts. c. Pareto charts. d. All of the answers are correct.
B
87. Decreasing the order receipt time, order waiting time, order manufacturing time, and order delivery time will reduce the delivery cycle time and the a. throughput time. b. customer response time. c. order fulfillment time. d. delivery time.
B
88. Which of the following is the term that describes the period that elapses from the moment a customer places an order for a product or requests service to the moment the firm delivers the product or service to the customer? a. throughput time. b. customer response time. c. order fulfillment time. d. delivery time.
B
89. Operational measures of time indicate the speed and reliability with which organizations supply products and services to customers. A company is more competitive if the time to respond to customers is a. longer. b. shorter. c. average. d. None of the answers is correct.
B
92. Which of the following is used to measure on-time performance? a. The number of on-time deliveries. b. The ratio of on-time deliveries to total deliveries. c. The ratio of total deliveries to on-time deliveries. d. The number of total deliveries.
B
94. Which of the following represents the performance evaluation tool that integrates financial and nonfinancial measures to promote achieving the company's goals and objectives? a. PERT chart. b. balanced scorecard. c. Pareto chart. d. control chart.
B
95. Which of the following is the performance evaluation tool that measures performance by integrating financial measures, internal business process measures, learning and growth measures, and customer measures? a. PERT chart. b. balanced scorecard. c. Pareto chart. d. control chart.
B
97. A firm will develop a competitive advantage if it has which of the following traits? a. longer new-product development time. b. shorter new-product development time. c. longer new-product research time. d. shorter new-product research time.
B
Biloxi Corporation Warranty claims $ 250,000 Product liability lawsuits 400,000 Rework costs 300,000 Quality training 500,000 Inspection of incoming materials 850,000 Statistical process control 500,000 Waste 225,000 Field testing at customer sites 475,000 Total yearly sales $75,000,000 67. Refer to Biloxi Company. What are the total internal failure costs? a. $475,000 b. $525,000 c. $300,000 d. $225,000
B
Three Dog Bite Company: Warranty claims $ 170,000 Product liability lawsuits 200,000 Rework costs 600,000 Quality training 505,000 Inspection of incoming materials 900,000 Statistical process control 650,000 Waste 325,000 Field testing at customer sites 375,000 Total yearly sales $50,000,000 63. Refer to Three Dog Bite Company. What are the total internal failure costs? a. $ 600,000 b. $ 925,000 c. $ 320,000 d. $1,220,000
B
11. The new quality-based view includes which of the following? a. waiting for inspections of finished products. b. reworking defective goods. c. establishing quality at the beginning of the process. d. incurring less than 3 percent defects is a reasonable goal.
C
14. The international standards that promote the importance of accounting for environmental costs (such as hazardous waste disposal, waste treatment, and periodic environmental inspections), and communicating these costs to management and people outside the organization are a. ISO 4000. b. ISO 9000. c. ISO 14000. d. ISO 24000.
C
15. Which of the following statements is true? a. As quality goes up, scrap and rework fall, raising costs. b. As quality goes up, scrap and rework increase, reducing costs. c. As quality goes up, scrap and rework fall, reducing costs. d. As quality goes up, scrap and rework increase, increasing costs.
C
18. Which of the following is not an example of performance measures used to measure customer satisfaction with service? a. Number of customers b. Amount of purchases per customer c. Number of customer complaints per 1,000 orders d. Customer satisfaction surveys
C
21. Which of the following statements is true concerning the critical success factors dealing with service? a. Service means giving the customer what the firm promised; it is the degree to which the customer is satisfied. b. Service is the price of a product which must cover its costs or the organization will no longer make the product. c. Service can be described as the expectations the customer has about all aspects, both tangible and intangible, of the product's purchase and use. d. None of the answers is correct.
C
23. The critical success factor(s) that relate to meeting customer requirements do not include a. service. b. quality. c. quantity. d. cost.
C
28. Which of the following is not one of the three critical success factors that relate to meeting customer quality requirements? a. Service b. Quality c. Throughput d. Cost
C
3. Which of the following is the most prominent American award given for total quality management? a. ISO 9000 certification. b. The Deming Prize. c. The Baldrige Award. d. The AQM Prize.
C
34. Which of the following is not an example of appraisal costs? a. Inspecting a sample of finished goods to ensure quality b. Testing products in use at the external site c. Inspecting production materials upon delivery d. All of the answers are appraisal costs.
C
35. Which of the following is not an example of appraisal costs? a. End-process sampling b. Field testing c. Procurement inspection d. All of the answers are appraisal costs.
C
39. Costs incurred for scrapping, reworking, reinspection or retesting are all examples of a. prevention costs. b. appraisal costs. c. internal failure costs. d. external failure costs.
C
4. Which of the following was created by Congress in 1987 to recognize U.S. firms with outstanding records of quality improvement and quality management? a. ISO 9000 certification. b. Deming Prize. c. Baldrige Award. d. CQM Prize.
C
40. Costs incurred for detecting nonconforming products and services before delivering them to customers are called a. prevention costs. b. appraisal costs. c. internal failure costs. d. external failure costs.
C
47. A quality improvement program attempts to achieve zero defects while minimizing costs. Cost of quality reports do not explicitly report the a. end-of-process sampling costs. b. quality training and material inspection costs. c. opportunity cost of lost business. d. scrap costs.
C
52. Which of the following are the two costs of failing to control quality? a. prevention costs and appraisal costs. b. appraisal costs and internal failure. c. internal failure and external failure costs. d. prevention costs and external failure costs.
C
55. Which statement is true concerning internal failure costs? a. Internal failure costs are incurred to prevent defects in the products or services being produced. b. Internal failure costs are incurred to detect individual units of products that do not conform to specifications. c. Internal failure costs are incurred when the firm discovers nonconforming products and services before delivery to customers. d. Internal failure costs are incurred when the customers discover nonconforming products and services at delivery.
C
76. Management tools that are graphs of skewed statistical distributions which display the number of problems or defects as bars of varying lengths are called a. Control charts. b. Cause-and-effect charts. c. Pareto charts. d. All of the answers are correct.
C
79. Vilfredo Pareto, an Italian economist and sociologist observed that approximately a. 1 percent of activities cause 99 percent of the problems. b. 5 percent of activities cause 95 percent of the problems. c. 20 percent of activities cause 80 percent of the problems. d. 35 percent of activities cause 65 percent of the problems.
C
82. Which of the following is not one of the factors that companies using JIT find essential for JIT to work? a. short customer-response times. b. backlog of orders. c. economic-order quantities for inventory. d. reliable suppliers.
C
90. Response time improvements often drive simultaneous improvements in a. economy and efficiency. b. economy and effectiveness. c. quality and productivity. d. quantity and efficiency.
C
Biloxi Corporation Warranty claims $ 250,000 Product liability lawsuits 400,000 Rework costs 300,000 Quality training 500,000 Inspection of incoming materials 850,000 Statistical process control 500,000 Waste 225,000 Field testing at customer sites 475,000 Total yearly sales $75,000,000 65. Refer to Biloxi Company. What are the total prevention costs? a. $1,000,000 b. $1,500,000 c. $1,850,000 d. $2,000,000
C
Three Dog Bite Company: Warranty claims $ 170,000 Product liability lawsuits 200,000 Rework costs 600,000 Quality training 505,000 Inspection of incoming materials 900,000 Statistical process control 650,000 Waste 325,000 Field testing at customer sites 375,000 Total yearly sales $50,000,000 64. Refer to Three Dog Bite Company. What are the total external failure costs? a. $ 600,000 b. $ 900,000 c. $ 370,000 d. $1,220,000
C
16. Concerning quality, which of the following is/are true? a. Quality increases as customer satisfaction increases. b. Customers expect to get what they pay for. c. A process that produces high-quality products usually has high efficiency ratings. d. All of the answers are correct.
D
17. Concerning cost, which of the following is/are true? a. Lowering cost results from the organization's ability to use resources more efficiently to obtain its objectives. b. Reducing costs is important because of the long-run relation between product cost and price. c. If two products provide the same quality and services, the customer will choose the product with the lower price. d. All of the answers are correct.
D
24. Which of the following are critical success factor(s) that relate to meeting customer requirements? a. service. b. quality. c. cost. d. All of the answers are correct.
D
41. Costs incurred for detecting nonconforming products and services after delivering them to customers are called a. prevention costs. b. appraisal costs. c. internal failure costs. d. external failure costs.
D
42. Which of the following costs relate to warranty repairs, product liability costs, marketing costs, and lost sales? a. prevention costs. b. appraisal costs. c. internal failure costs. d. external failure costs.
D
43. Repairing a defect found after a product has been delivered to the customer is an example of which of the following type of cost? a. prevention costs. b. appraisal costs. c. internal failure costs. d. external failure costs.
D
44. Which of the following is an example of the costs incurred by a tire company for replacing defective tires? a. prevention costs. b. appraisal costs. c. internal failure costs. d. external failure costs.
D
49. Total quality costs include Prevention; Carrying; Appraisal a. Yes; Yes; Yes b. No; No; Yes c. Yes; No; No d. Yes; No; Yes
D
56. Which statement is true concerning external failure costs? a. External failure costs are incurred to prevent defects in the products or services being produced. b. External failure costs are incurred to detect individual units of products that do not conform to specifications. c. External failure costs are incurred when the firm discovers nonconforming products and services before delivery to customers. d. External failure costs are incurred when the customers discover nonconforming products and services at delivery.
D
57. Which of the following is a cost incurred to detect individual units of products that do not conform to specifications? a. internal failure costs. b. external failure costs. c. prevention costs d. appraisal costs.
D
59. Which of the following is a cost incurred when customers discover nonconforming products and services at delivery? a. prevention costs. b. appraisal costs. c. internal failure costs. d. external failure costs.
D
6. Which of the following statements best describes the traditional view of quality? a. The traditional view of quality assumes that improving quality always requires increasing costs. b. The traditional view of quality holds that firms can reduce total costs by producing lower-quality goods c. The traditional view of quality holds that firms can reduce total costs by tolerating some level of defective goods. d. All of the answers are correct.
D
68. A current theme in business today is that "quality is free." Which of the following statements best exemplifies that theme? a. Cost-benefit analyses is the primary focus in improving quality. b. Quality is always free in the short-run. c. Short-run benefits will always outweigh the costs of improving quality. d. If quality is built into the product, the resulting benefits far outweigh the costs of improving quality.
D
7. The quality based view states that the firm should a. always attempt to improve quality and that such attempts will succeed without limit. b. not wait for inspections of finished products to reveal defects and then rework defective goods. c. establish quality goals and procedures at the beginning of the process and aim for zero defects. d. All of the answers are correct.
D
70. Which of the following tool for quality control has the four categories: human factors, methods and design factors, machine-related factors, and materials and components factors? a. Warning signals b. Control charts c. Pareto charts d. Cause and effect analysis
D
71. What tools do firms use to identify quality control problems? a. Control charts b. Cause-and-effect analyses c. Pareto charts d. All of the answers are correct.
D
73. Control charts are management tools that a. depict variations in a process and its behavior over time. b. help management distinguish between random or routine variations in quality. c. direct attention to variations that management should investigate. d. All of the answers are correct.
D
74. Just-in-time requires the following factor(s) essential for success: a. Purchasing quality materials b. Smooth production flow, short customer-response times, and backlog of orders c. Well-trained, flexible workforce committed to quality d. All of the answers are correct.
D
75. When is the appropriate time to purchase or produce goods and services in a just-in-time (JIT) environment? a. when the available inventory equals the economic ordering quantity. b. when the inventory equals one-half of the next months requirements. c. when the inventory equals the next months requirements. d. when the company needs them.
D
78. Which of the following is(are) potential causes of defects in cause and effect analysis? a. human factors. b. methods and design factors. c. machine related and materials/components factors. d. All of the answers are correct.
D
8. The quality based view a. holds that high quality pays for itself. b. emphasizes constantly improving systems and processes. c. focuses on long-run profits d. All of the answers are correct.
D
81. Which of the following is not one of the factors that companies using JIT find essential for JIT to work? a. total quality - all employees must be involved in quality. b. smooth production flow - fluctuations in production lead to delays. c. purchasing quality materials - defective materials disrupt the production flow. d. specialized, inflexible workforce - workers are unique specialized experts.
D
83. Which of the following statements is correct concerning break-even time? a. Break-even time is the length of time required to recover the investment made in new-product development. b. Break-even time ignores all cash flows after the break-even time has been identified. c. Break-even time does not consider strategic and nonfinancial reasons for product development. d. All of the answers are correct.
D
84. Which of the following statements is correct concerning break-even time? a. Break-even time is the length of time required to recover the investment made in new-product development. b. Break-even time begins when management approves a project, rather than when cash out-flows first occur. c. Break-even time considers the time value of money by discounting all cash flows. d. All of the answers are correct.
D
86. Which of the following is a limitation of break-even time in assessing new-product development? a. All cash flows after the moment of break-even are ignored. b. Strategic and nonfinancial reasons for product development are not considered. c. Variances between one business to the next due to product life cycles and investment requirements. d. All of the answers are correct.
D
93. Which of the following is true about the use of the balanced scorecard to measure performance? a. It measures performance by integrating financial and nonfinancial measures. b. It promotes achieving the company's goals and objectives. c. It uses different sorts of measures such as financial, internal business process, learning and growth, and customer. d. All of the answers are correct.
D
99. Activity-based management can reduce customer response time by a. identifying the activities that consume the most resources. b. making the activities more efficient. c. identifying non-value-added activities which the firm can eliminate. d. All of the answers are correct.
D
Biloxi Corporation Warranty claims $ 250,000 Product liability lawsuits 400,000 Rework costs 300,000 Quality training 500,000 Inspection of incoming materials 850,000 Statistical process control 500,000 Waste 225,000 Field testing at customer sites 475,000 Total yearly sales $75,000,000 66. Refer to Biloxi Company. What are the total external failure costs? a. $250,000 b. $400,000 c. $950,000 d. $650,000
D
Three Dog Bite Company: Warranty claims $ 170,000 Product liability lawsuits 200,000 Rework costs 600,000 Quality training 505,000 Inspection of incoming materials 900,000 Statistical process control 650,000 Waste 325,000 Field testing at customer sites 375,000 Total yearly sales $50,000,000 61. Refer to Three Dog Bite Company. What are the total prevention costs? a. $ 320,000 b. $1,430,000 c. $ 780,000 d. $2,055,000
D
72. Management tools that depict variations in a process and its behavior over time, help management distinguish between random or routine variations in quality, and direct attention to variations that management should investigate are called a. control charts. b. cause-and-effect analyses. c. Pareto charts. d. All of the answers are correct.
a
