APP02B-Ref1 APP02B-Ref2 APP02B-Ref3 APP02B-Ref4 10 11 12 13 14 15 16 17 18 19 20 21 22-25 26-29 30-33 34-37 x x x x x x x x x x x x x x x x x x x x x x x x x App2B-1 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education x x x x x x x x x x x x x x x x Professional exam adapted LO10: Quality cost report (App 2B) Difficulty E M E E E M E M E M M M M M M M M M M M M M M M M LO9: Classification of quality costs (App2B) Question Type T/F T/F T/F T/F T/F T/F Conceptual M/C Conceptual M/C Conceptual M/C Conceptual M/C Conceptual M/C Conceptual M/C Conceptual M/C Conceptual M/C Conceptual M/C Conceptual M/C Conceptual M/C Conceptual M/C Conceptual M/C Conceptual M/C Conceptual M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C 38 39 40 41 42 Problem Problem Problem Problem Problem M M M M M x x x x x App2B-2 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education x x x x x Appendix 02B Cost of Quality True / False Questions Quality of conformance is the degree to which an actual product meets its design specifications and is free of defects or other problems that might affect appearance or performance True False An increase in appraisal costs will usually result in a decrease in internal failure costs True False Internal failure costs result from identification of defects during the appraisal process Such costs may include scrap, rejected products, rework, and downtime True False ISO 9000 certification is relatively easy to achieve because little documentation on quality control procedures is needed True False A product can have a high quality design but have a low quality of conformance True False The information in a quality cost report can be used to help managers determine if their quality costs are poorly distributed True False Multiple Choice Questions App2B-3 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education In order to reduce its overall quality costs, a company should focus most of its efforts on: A B C D internal failure costs external failure costs If a company wants to decrease its total quality cost, it would usually be best to spend more money on: A B C D E internal and external failure prevention and internal failure appraisal and external failure appraisal and internal failure The cost of warranty repairs would be classified as a(n): A B C D internal failure co external failure cos 10 Which of the following would be classified as an appraisal cost on a quality cost report? A B C D Re-entering data because of keying errors Quality data gathering, analysis, and reporting Debugging software errors Test and inspection of in-process goods 11 Which of the following would be classified as an appraisal cost on a quality cost report? A B C D Supervision of testing and inspection activities Systems development Quality engineerin App2B-4 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education 12 Which of the following would be classified as a prevention cost on a quality cost report? A B C D Technical support provided to suppliers Rework labor and overhead Debugging software errors 13 Which of the following would be classified as an appraisal cost on a quality cost report? A B C D Downtime caused by quality problems Supplies used in testing and inspection Quality engineerin 14 Which of the following would be classified as an external failure cost on a quality cost report? A B C D Depreciation of test equipment Re-entering data because of keying errors Rework labor and overhead Liability arising from defective products 15 Which of the following would be classified as a prevention cost on a quality cost report? A B C D Quality improvement projects Disposal of defective products Depreciation of test equipment Final product testing and inspection 16 Which of the following would be classified as an internal failure cost on a quality cost report? A B C D Supervision of testing and inspection activities Re-entering data because of keying errors Cost of field servicing and handling complaints Depreciation of test equipment App2B-5 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education 17 Which of the following would be classified as an external failure cost on a quality cost report? A B C D Rework labor and overhead Downtime caused by quality problems 18 Which of the following would be classified as an internal failure cost on a quality cost report? A B C D Warranty repairs and replacements Supplies used in testing and inspection Debugging software errors Final product testing and inspection 19 Which of the following would be classified as a prevention cost on a quality cost report? A B C D Re-entering data because of keying errors Rework labor and overhead Technical support provided to suppliers 20 Which of the following would be classified as an external failure cost on a quality cost report? A B C D Quality engineering Systems development 21 Which of the following would be classified as an internal failure cost on a quality cost report? A B C D Re-entering data because of keying errors Final product testing and inspection Supplies used in testing and inspection Depreciation of test equipment App2B-6 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Fabri Company's quality cost report is to be based on the following data: 22 What would be the total prevention cost appearing on the quality cost report? A B C D 23 What would be the total appraisal cost appearing on the quality cost report? A B C D 24 What would be the total internal failure cost appearing on the quality cost report? A B C D 25 What would be the total external failure cost appearing on the quality cost report? A B C D App2B-7 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Eagan Company's quality cost report is to be based on the following data: 26 What would be the total prevention cost appearing on the quality cost report? A B C D 27 What would be the total appraisal cost appearing on the quality cost report? A B C D 28 What would be the total internal failure cost appearing on the quality cost report? A B C D 29 What would be the total external failure cost appearing on the quality cost report? A B C D App2B-8 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Faber Company's quality cost report is to be based on the following data: 30 What would be the total prevention cost appearing on the quality cost report? A B C D 31 What would be the total appraisal cost appearing on the quality cost report? A B C D 32 What would be the total internal failure cost appearing on the quality cost report? A B C D 33 What would be the total external failure cost appearing on the quality cost report? A B C D App2B-9 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Eagle Company's quality cost report is to be based on the following data: 34 What would be the total prevention cost appearing on the quality cost report? A B C D 35 What would be the total appraisal cost appearing on the quality cost report? A B C D 36 What would be the total internal failure cost appearing on the quality cost report? A B C D 37 What would be the total external failure cost appearing on the quality cost report? A B C D App2B-10 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education 28 What would be the total internal failure cost appearing on the quality cost report? A$ 4, 0 B$ 1 3, 0 C$ 1, 0 D$ 4, 0 Total internal failure cost = $86,000 + $27,000 = $113,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: Medium Learning Objective: 02B-09 Identify the four types of quality costs and explain how they interact Learning Objective: 02B-10 Prepare and interpret a quality cost report App2B-64 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education 29 What would be the total external failure cost appearing on the quality cost report? A$ 4, 0 B$ 4, 0 C$ 2, 0 D$ 5, 0 Total external failure cost = $94,000 + $38,000 = $132,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: Medium Learning Objective: 02B-09 Identify the four types of quality costs and explain how they interact Learning Objective: 02B-10 Prepare and interpret a quality cost report App2B-65 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Faber Company's quality cost report is to be based on the following data: 30 What would be the total prevention cost appearing on the quality cost report? A$ 3, 0 B$ 4, 0 C$ 1, 0 D$ 1 5, 0 Total prevention cost = $82,000 + $51,000 = $133,000 AACSB: Analytic App2B-66 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: Medium Learning Objective: 02B-09 Identify the four types of quality costs and explain how they interact Learning Objective: 02B-10 Prepare and interpret a quality cost report 31 What would be the total appraisal cost appearing on the quality cost report? A$ 9, 0 B$ 0, 0 C$ 6, 0 D$ 8, 0 Total appraisal cost = $64,000 + $72,000 = $136,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: Medium Learning Objective: 02B-09 Identify the four types of quality costs and explain how they interact Learning Objective: 02B-10 Prepare and interpret a quality cost report App2B-67 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education 32 What would be the total internal failure cost appearing on the quality cost report? A$ 1, 0 B$ 9, 0 C$ 9, 0 D$ 0, 0 Total internal failure cost = $49,000 + $14,000 + $98,000 = $161,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: Medium Learning Objective: 02B-09 Identify the four types of quality costs and explain how they interact Learning Objective: 02B-10 Prepare and interpret a quality cost report App2B-68 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education 33 What would be the total external failure cost appearing on the quality cost report? A$ 0, 0 B$ 5 1, 0 C$ 1, 0 D$ 2, 0 Total external failure cost = $80,000 + $41,000 = $121,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: Medium Learning Objective: 02B-09 Identify the four types of quality costs and explain how they interact Learning Objective: 02B-10 Prepare and interpret a quality cost report App2B-69 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Eagle Company's quality cost report is to be based on the following data: 34 What would be the total prevention cost appearing on the quality cost report? A$ 7, 0 B$ 7, 0 C$ 8, 0 D$ 6, 0 Total prevention cost = $59,000 + $18,000 = $77,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: Medium Learning Objective: 02B-09 Identify the four types of quality costs and explain how they interact App2B-70 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Learning Objective: 02B-10 Prepare and interpret a quality cost report 35 What would be the total appraisal cost appearing on the quality cost report? A$ 5, 0 B$ 0, 0 C$ 5, 0 D$ 8, 0 Total appraisal cost = $48,000 + $27,000 + $30,000 = $105,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: Medium Learning Objective: 02B-09 Identify the four types of quality costs and explain how they interact Learning Objective: 02B-10 Prepare and interpret a quality cost report App2B-71 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education 36 What would be the total internal failure cost appearing on the quality cost report? A$ 4, 0 B$ 5, 0 C$ 9, 0 D$ 2, 0 Total internal failure cost = $13,000 + $52,000 = $65,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: Medium Learning Objective: 02B-09 Identify the four types of quality costs and explain how they interact Learning Objective: 02B-10 Prepare and interpret a quality cost report App2B-72 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education 37 What would be the total external failure cost appearing on the quality cost report? A$ 1, 0 B$ 2, 0 C$ 6, 0 D$ 3 8, 0 Total external failure cost = $52,000 + $39,000 = $91,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: Medium Learning Objective: 02B-09 Identify the four types of quality costs and explain how they interact Learning Objective: 02B-10 Prepare and interpret a quality cost report Essay Questions App2B-73 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education 38 Harui 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 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: Medium Learning Objective: 02B-09 Identify the four types of quality costs and explain how they interact Learning Objective: 02B-10 Prepare and interpret a quality cost report App2B-74 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education 39 Galati 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 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: Medium Learning Objective: 02B-09 Identify the four types of quality costs and explain how they interact Learning Objective: 02B-10 Prepare and interpret a quality cost report App2B-75 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education 40 Falstaff 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 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: Medium Learning Objective: 02B-09 Identify the four types of quality costs and explain how they interact Learning Objective: 02B-10 Prepare and interpret a quality cost report App2B-76 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education 41 Harvie 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 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: Medium Learning Objective: 02B-09 Identify the four types of quality costs and explain how they interact Learning Objective: 02B-10 Prepare and interpret a quality cost report App2B-77 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education 42 Galant 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 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: Medium Learning Objective: 02B-09 Identify the four types of quality costs and explain how they interact Learning Objective: 02B-10 Prepare and interpret a quality cost report App2B-78 Copyright © 2015 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education ... Depreciation of test equipment Final product testing and inspection 16 Which of the following would be classified as an internal failure cost on a quality cost report? A B C D Supervision of testing... Re-entering data because of keying errors Final product testing and inspection Supplies used in testing and inspection Depreciation of test equipment App2B-6 Copyright © 2015 McGraw-Hill Education... Debugging software errors Test and inspection of in-process goods 11 Which of the following would be classified as an appraisal cost on a quality cost report? A B C D Supervision of testing and inspection