Question

An example of an Appraisal Quality cost is:

	A.	rework costs
	B.	reliability testing
	C.	promotion and awards to employee
	D.	warranty repairs and replacement costs
	E.	None of the above

When considering whether to accept a special one-time order at a discounted price, in additional to making a quantitative analysis (analyzing costs and revenue implications), a qualitative (nonfinancial) analysis should also be made to consider the impact on:

	A.	the practicality of your product
	B.	your irrelevant costs
	C.	your relevant costs
	D.	your regular customers
	E.	None of the above

Which type of cost driver is most appropriate for automated processes?

	A.	Volume-based drivers
	B.	Activity-based drivers
	C.	Direct labor-based drivers
	D.	All of these answers are correct
	E.	None of the above

The Defect Company recorded the following costs of quality during the current period:

Restocking costs		$1,800
Downtime from assembly machine breakdown		$1,500
Inspection of finished units		1,000
Product design		4,000
Reliability testing upon completion of production		2,500
Liability claims from recalls		1,500
Training for assembly line workers		5,000
Warranty repairs and replacements		2,500

  

How much of the quality costs were prevention?

	A.	$4,000
	B.	$5,000
	C.	$9,000
	D.	$11,500
	E.	None of the above

Pan Company expects credit sales for January to be $50,000. Cash sales are expected to be $30,000. The company expects credit and cash sales to increase by 10% for the month of February. Credit sales are collected in the month following the month in which sales are made. Based on this information, the amount of cash collections in February would be:

	A.	$88,000
	B.	$80,000
	C.	$85,000
	D.	$87,000
	E.	None of the above

When a company has a goal to always make a perfect product they are following a:

	A.	zero defects policy
	B.	perfect quality policy
	C.	best quality policy
	D.	total customer satisfaction policy
	E.	None of the above

A management approach based on participation of all members of a company with the long-term goal of customer satisfaction is commonly referred to as:

	A.	long-term quality customer satisfaction
	B.	quality ideas
	C.	quality meetings
	D.	Total Quality Management (TQM)
	E.	None of the above

Apps Company reported the following information for the company’s two products:

                        Item                            Product A      Product B

            Selling price per unit                   $25               $35

            Variable cost per unit                     $15       $20

Assume that 75,000 machine hours are available; Product A takes 2 machine hours to produce, and Product B takes 4 machine hours to produce. Apps Company can sell all it can make of either product. Which of the following statement is correct?

	A.	Product A should be produced because more of it can be produced
	B.	Product A should be produced because it will produce a greater total profit for the company
	C.	Product B should be produced because it provides a greater contribution margin
	D.	Both products will provide the same total profit
	E.	None of the above

Answer 1