Question : 11) How much will appraisal costs change assuming the new : 1186123

 

11) How much will appraisal costs change assuming the new prevention methods reduce the amount of material failures during the appraisal phase by 40 percent?

A) $160,000 decrease

B) $40,000 increase

C) $20,000 decrease

D) $8,000 decrease

E) $7,450 decrease

12) How much will internal failure costs change if the internal product failures are reduced by 50 percent with the new procedures?

A) $10,000 decrease

B) $20,000 decrease

C) $250,000 decrease

D) $500,000 decrease

E) $550,000 decrease

 

13) How much does external failure costs change if all changes are as anticipated with the new prevention procedures?

A) $57,024 decrease

B) $57,600 increase

C) $57,600 decrease

D) $72,000 decrease

E) $72,624 increase

 

14) Management has offered to allow the prevention changes if all changes take place as anticipated and the amounts netted are less than the cost of the equipment. What is the net impact of all the changes created by the preventive changes?

A) $52,000

B) $(5,024)

C) $(57,024)

D) $(35,024)

E) $(25,024)

15) Which of the following are not nonfinancial measures for evaluating customer satisfaction?

A) total sales per customer

B) customer response time

C) number of customer complaints per month

D) ratio of defective units to good units shipped to customers

E) timeliness of delivery

 

16) The Cost of Quality measure has all of the following advantages EXCEPT

A) being a useful measure of comparing different quality improvement projects.

B) serving as a common denominator for evaluating tradeoffs among prevention and failure costs.

C) focusing on how costly poor quality can be.

D) being indicators of long-term performance.

E) setting priorities for achieving maximum cost reduction.

 

17) Regarding the means by which relevant costs and benefits are evaluated when evaluating quality improvement, the key question is:

A) Which alternative solution will make the customer happiest?

B) How will total costs and total revenues change under each alternative solution?

C) Will the employees of the company be able to implement the change?

D) How long will it take for the improvement program to be fully functional?

E) How long will the training period be?

 

18) Design Products is committed to its quality program. It works with all areas of the company to establish sound quality programs within reasonable budget guidelines. For the current year, it has budgeted $1,000,000 for prevention costs and $800,000 for appraisal costs. Internal failure has a budget of $100 per failed item, while external failure has a total budget of $600,000.

 

Product Testing has proposed to management a new method of testing products. If management decides to implement the new method, $2 per unit of appraisal costs will be saved, up to a level of 200,000 tests. No additional savings are incurred past the 200,000 level. The new method involves $110,000 in training costs and $60,000 in yearly testing supplies.

 

Traditionally, 3 percent of all completed items have to be reworked. External failure costs average $120 per failed unit. The company’s average external failures are 1 percent of units sold. The company carries no ending inventories.

 

Required:

a.What is the adjusted budget for appraisal costs assuming the new method is implemented and 800,000 units are tested during the manufacturing process during the year?

b.How much does internal failure costs change assuming 600,000 units are tested under the new method and it reduces the amount of unacceptable units in the manufacturing process by 40 percent?

c.What would be the change in the external failure budget assuming external failures are reduced by 60 percent, assuming the same facts as in part (b)?

 

 

 

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