Managerial Accounting
16th Edition
ISBN: 9781259995484
Author: Ray Garrison
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 1.A, Problem 1E
EXERCISE 1A−1 Cost of Quality Terms LO1−7, LO1−8
A number of terms relating to the cost of quality and quality management are listed below:
Appraisal costs Quality circles Quality cost report Prevention costs Quality of conformance External failure costs Internal failure costs Quality costs
Required:
Choose the term or terms that most appropriately complete the following statements. The terms can be used more than once and a blank ran hold more than one word.
- A product that has a high rate of defects is said to have a low _______.
- All of the costs associated with preventing and dealing with defects once they occur are known as _______.
- In many companies, small groups of employees, known as_______ meet on a regular basis to discuss ways to improve quality.
- A company incurs_______ and _______in an effort to keep defects from occurring.
- A company incurs_______ and_______ because defects have occurred.
- Of the four groups of costs associated with quality of conformance,_______ are generally the most damaging to a company.
- Inspection, testing, and other costs incurred to keep defective products from being shipped to customers are known as _______.
- _______ are incurred in an effort to eliminate poor product design, defective manufacturing practices, and the providing of substandard service.
- The costs relating to defects, rejected products, and downtime caused by quality problems are known as _______.
- When a product that is defective in some way is delivered to a customer,_______ are incurred.
- Over time a company’s total quality costs should decrease if it redistributes its quality costs by placing its greatest emphasis on_______ and _______.
- One way to ensure that management is aware of the costs associated with quality is to summarize such costs on a _______.
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True or FalseProcess value analysis is the examination, quantification, and explanation of the effects of cost drivers. The results are often used for continuous improvements programs to reduce throughput times, improve quality, and reduce costs
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What is "balanced" in the balanced scorecard approach?
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O The number of products produced.
O The number of defects found on each product.
O The amount of costs allocated to products.
O The emphasis on financial and non-financial performance measurements.
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The cost of lost future sales after a customer finds a defect in a product is which type of quality cost?
a. Prevention cost
b. Appraisal cost
c. Internal failure cost
d. External failure cost
Chapter 1 Solutions
Managerial Accounting
Ch. 1.A - EXERCISE 1A1 Cost of Quality Terms LO17, LO18 A...Ch. 1.A - EXERCISE 1A2 Classification of Quality Costs LO17...Ch. 1.A - Prob. 3PCh. 1.A - PROBLEM 1A4 Quality Cost Report LO17, LO18 page 66...Ch. 1 - Prob. 1QCh. 1 - Define the following: (a) direct materials, (b)...Ch. 1 - Explain the difference between a product cost and...Ch. 1 - Distinguish between (a) a variable cost, (b) a...Ch. 1 - Prob. 5QCh. 1 - Define the following terms: (a) cost behavior and...
Ch. 1 - What is meant by an activity base when dealing...Ch. 1 - Managers often assume a strictly linear...Ch. 1 - Distinguish between discretionary fixed costs and...Ch. 1 - Does the concept of the relevant range apply to...Ch. 1 - What is the difference between a traditional...Ch. 1 - Prob. 12QCh. 1 - Prob. 13QCh. 1 - Prob. 14QCh. 1 - Prob. 1AECh. 1 - Prob. 2AECh. 1 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 1 - L012, L013, L014, L015, L016 Martinez Company’s...Ch. 1 - L01–1, L01–2, L01–3, L01–4, L01–5, L01–6
Martinez...Ch. 1 - L01–1, L01–2, L01–3, L01–4, L01–5, L01–6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 1 - EXERCISE 1—1 Identifying Direct and Indirect Costs...Ch. 1 - EXERCISE 1-2 Classifying Manufacturing Costs LO1-2...Ch. 1 - EXERCISE 1-3 Classifying Costs as Product or...Ch. 1 - EXERCISE 14 Fixed and Variable Cost Behavior LO14...Ch. 1 - Prob. 5ECh. 1 - EXERCISE 1—6 Traditional and Contribution Format...Ch. 1 - Prob. 7ECh. 1 - EXERCISE 18 Product Costs and Period Costs;...Ch. 1 - Prob. 9ECh. 1 - Prob. 10ECh. 1 - EXERCISE 1—11 Cost Behavior; Contribution Format...Ch. 1 - EXERCISE 1-12 Product and Period Cost Flows LO1–3...Ch. 1 - Prob. 13ECh. 1 - EXERCISE 1-14 Cost Classification 1O1–2, LO1–3,...Ch. 1 - Prob. 15ECh. 1 - EXERCISE 1–16 Cost Classifications for Decision...Ch. 1 - EXERCISE 1-17 Classifying Variable and Fixed Costs...Ch. 1 - PROBLEM 1-18 Direct and Indirect Costs; variable...Ch. 1 - PROBLEM 1-19 Traditional and Contribution Format...Ch. 1 - PROBLEM 120 Variable and Fixed Costs; Subtleties...Ch. 1 - Prob. 21PCh. 1 - Prob. 22PCh. 1 - PROBLEM 123 Cost Classification LO11, LO13, LO14...Ch. 1 - PROBLEM 1-24 Different Cost Classifications for...Ch. 1 - Prob. 25PCh. 1 - CASE 1-26 Cost Classification and Cost Behavior...Ch. 1 - Prob. 27C
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- A process that is often linked to Six Sigma and is designed toward continuous improvement by eliminating waste is ___________________________. A. kamikaze B. value chain C. total quality management D. kaizenarrow_forwardWhich of the following statements best describes the relationship among the costs of quality? a. The amount spent on prevention and appraisal costs has no impact on the amount spent on internal and external failure costs. b. Adequate spending on prevention and appraisal costs will eliminate all internal and external failure costs. c. Spending more on prevention and appraisal costs will reduce the total overall costs of quality. d. Spending more on prevention and appraisal costs will increase the total overall costs of quality.arrow_forwardMatch each definition with its related term by selecting the appropriate term in the dropdown provided. (Select "None of these are correct" if there is no term for the "Definition".) Possible terms: Activity-Based Costing Appraisal or Inspection Costs Batch-Level Activities External Failure Costs Facility-Level Activities Just-in-Time System None of These are Correct Prevention Costs Unit-Level Activities Value Chain Value-Added Activityarrow_forward
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- Which of the following organizational characteristics critically affect the design of a cost management system? Select one: a. Culture Critical success factors Mission Form Yes Yes Yes Yes b. Culture Critical success factors Mission Form No Yes No Yes c. Culture Critical success factors Mission Form No Yes Yes No d. Culture Critical success factors Mission Form Yes Yes No Noarrow_forwardA quality control program that depends on multiple team members for removing waste and diminishing defects within products is _________________. kaizen total quality management Lean Six Sigma a balanced scorecardarrow_forwardContinuous improvement is the governing principle of a lean accounting system. Following are several performance measures. Some of these measures would be associated with a traditional standard-costing accounting system, and some would be associated with a lean accounting system. a. Materials price variances b. Cycle time c. Comparison of actual product costs with target costs d. Materials quantity or efficiency variances e. Comparison of actual product costs over time (trend reports) f. Comparison of actual overhead costs, item by item, with the corresponding budgeted costs g. Comparison of product costs with competitors product costs h. Percentage of on-time deliveries i. First-time through j. Reports of value- and non-value-added costs k. Labor efficiency variances l. Days of inventory m. Downtime n. Manufacturing cycle efficiency (MCE) o. Unused (available) capacity variance p. Labor rate variance q. Using a sister plants best practices as a performance standard Required: 1. Classify each measure as lean or traditional (standard costing). If traditional, discuss the measures limitations for a lean environment. If it is a lean measure, describe how the measure supports the objectives of lean manufacturing. 2. Classify the measures into operational (nonfinancial) and financial categories. Explain why operational measures are better for control at the shop level (production floor) than financial measures. Should any financial measures be used at the operational level? 3. Suggest some additional measures that you would like to see added to the list that would be supportive of lean objectives.arrow_forward
- The cost of lost future sales after a customer finds a defect in a product is which type of quality cost? Prevention cost Appraisal cost Internal failure cost External failure costarrow_forwardS1: A manufacturing cycle efficiency (MCE) ratio of less than 1.00 is desirable since this ratio measures the amount of non-value-added time to throughput time. S2: Only Financial measures are necessary and already sufficient, for they show the problems and enable the decision makers to react to the situation. Only S1 is correct Both statements are correct Both statements are incorrect Only S1 is incorrectarrow_forwardWhich of the following cost categories tend to increase during the early years of TQM? Which of them tend to decrease over the years due to successful total quality management? Explain. a. Prevention b. Appraisal c. Internal Failure d. External Failurearrow_forward
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