27. Which of the following is not considered a component of the cost of quality

Question

27. Which of the following is not considered a component of the cost of quality in relation to Total Quality Management? a. Prevention Costs b. Appraisal Costs c. Internal Failure Costs d. Customer service 28. Which of the following is an example of an external failure costs? a. Inspection b. Employee Training c. Rework d. Product returns 29. Total cycle time for manufacturing a bicycle is 7 days. This includes 4 days spent on non- value added activities. What is the calculated Manufacturing Efficiency Ratio? a. 36.36% b. 42.86% c. 57.14% d.100% 30. Maintaining extremely small materials, work in process and finished good inventory balances is a characteristic of which of the following? a. Activity-Based Management. b. Just-In-Time Manufacturing. c. Total Quality Management. d. Target Costing. 31. The primary objective of activity-based management is using activity-based costing: To develop more accurate product costs. b. a. To reduce and eliminate non-value added activities. To increase product quality d. c. To identify instances of internal failure. 32. Which of the following would be a reason for a company to use process costing? a. b. c. d. Products are designed based on customer specifications. Production usually occurs in high volume through repetitive operations. Products require different amounts of material, labor and overhead. Products are bought and sold at price sufficient to earn a profit. 33. Sunk costs are costs that: a. b. c. d. Have already been incurred as a result of past actions. Vary among the alternative courses of action being considered. Are benefits that could have been obtained by following another course of action. Result from favorable cost variances.

Explanation / Answer

Solution:

Question 27 The answer to the above question is - d. Customer service. All other costs i.e. Prevention cost, internal failure cost, external failure cost and appraisal costs are the part of cost of quality Question 28 The answer to the above question is - d. Product returns Product return is a type of external failure cost, since it is incurred from outside of the business, not from internal factors. Question 29 The answer to the above question is - Efficiency ratio = Value added time / Total time cycle. Efficiency ratio = 3 days / 7 days = 42.86% Answer - b. 42.86% Question 33 The answer to the above question is - a. Have already been incurred as a result of past actions Sunk costs are the past costs.

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