121. Mathew Corporation has the information of quality cost for the year 20x0 as follows:
Cost of quality ($)
Quality engineering: 70,000
Lost contribution margin from current and future sales: 1,200,000
Laboratory testing: 60,000
Downtime: 100,000
Quality improvement plans: 40,000
Servicing customer complaints: 50,000
Finished goods inspection: 80,000
Rework: 400,000
% Internal failure cost/total costs of quality is:
a. 25%
b. 27%
c. 20%
d. 27.5%
122. A ________ is a chart that indicates how frequently each type of defect occurs, ordered from the most frequent to the least frequent.
a. quality
b. pareto diagram
c. linear
d. lean production
123. Landers Corporation has the information of quality cost for the year 20x1 as follows:
Cost of quality ($)
Material disposals: 200,000
Quality planning; 60,000
Lost contribution margin from current and future sales: 1,400,000
Lost contribution margin from scrapped products: 400,000
Inspecting finished goods: 120,000
Testing equipment: 40,000
Quality reporting: 200,000
Warranty claims: 100,000
% External failure costs/Total costs of quality is:
a. 56%
b. 24%
c. 12%
d. 60%
124. Mathew Corporation has the information of quality cost for the year 20x0 as follows:
Cost of quality ($)
Quality engineering: 70,000
Lost contribution margin from current and future sales: 1,200,000
Laboratory testing: 60,000
Downtime: 100,000
Quality improvement plans: 40,000
Servicing customer complaints: 50,000
Finished goods inspection: 80,000
Rework: 400,000
% Prevention costs/total costs of quality is:
a. 8.5%
b. 25.5%
c. 5.5%
d. 10.5%
125. ________ are costs incurred to detect which of the individual units of products do not conform to specifications
a. Internal failure costs
b. Prevention costs
c. External failure costs
d. Appraisal costs
126. Landers Corporation has the information of quality cost for the year 20x1 as follows:
Cost of quality ($)
Material disposals: 200,000
Quality planning: 60,000
Lost contribution margin from current and future sales: 1,400,000
Lost contribution margin from scrapped products: 400,000
Inspecting finished goods: 120,000
Testing equipment: 40,000
Quality reporting: 200,000
Warranty claims: 100,000
In order to reducing total quality costs, the company should focus more on:
a. prevention and appraisal costs
b. appraisal costs
c. Internal and external failure costs
d. prevention costs
127. ________ are costs incurred on defective products before they are shipped to customers:
a. External failure costs
b. Appraisal costs
c. Internal failure costs
d. Prevention costs
128.________ are costs incurred on defective products after they have been shipped to customers.
a. Internal failure costs
b. External failure costs
c. Prevention costs
d. Appraisal costs
129. Information on the static budget and actual results as follows:
Net income on the flexible budget is:
a. $355,600
b. $360,267
c. $356,100
d. $425,600
130. Division A sells its products internally to Division B, which in turn, produces B’s products that sell for $10 per unit. Division A incurs costs of $1.25 per unit while Division B incurs additional costs of $5.00 per unit. Assuming the transfer price of A’s production to Division B is set at $2.00 per unit, what amount correctly reflects the company's operating income per unit?
a. $0.75
b. $3.75
c. $2.50
d. $1.25
Cost of quality ($)
Quality engineering: 70,000
Lost contribution margin from current and future sales: 1,200,000
Laboratory testing: 60,000
Downtime: 100,000
Quality improvement plans: 40,000
Servicing customer complaints: 50,000
Finished goods inspection: 80,000
Rework: 400,000
% Internal failure cost/total costs of quality is:
a. 25%
b. 27%
c. 20%
d. 27.5%
122. A ________ is a chart that indicates how frequently each type of defect occurs, ordered from the most frequent to the least frequent.
a. quality
b. pareto diagram
c. linear
d. lean production
123. Landers Corporation has the information of quality cost for the year 20x1 as follows:
Cost of quality ($)
Material disposals: 200,000
Quality planning; 60,000
Lost contribution margin from current and future sales: 1,400,000
Lost contribution margin from scrapped products: 400,000
Inspecting finished goods: 120,000
Testing equipment: 40,000
Quality reporting: 200,000
Warranty claims: 100,000
% External failure costs/Total costs of quality is:
a. 56%
b. 24%
c. 12%
d. 60%
124. Mathew Corporation has the information of quality cost for the year 20x0 as follows:
Cost of quality ($)
Quality engineering: 70,000
Lost contribution margin from current and future sales: 1,200,000
Laboratory testing: 60,000
Downtime: 100,000
Quality improvement plans: 40,000
Servicing customer complaints: 50,000
Finished goods inspection: 80,000
Rework: 400,000
% Prevention costs/total costs of quality is:
a. 8.5%
b. 25.5%
c. 5.5%
d. 10.5%
125. ________ are costs incurred to detect which of the individual units of products do not conform to specifications
a. Internal failure costs
b. Prevention costs
c. External failure costs
d. Appraisal costs
126. Landers Corporation has the information of quality cost for the year 20x1 as follows:
Cost of quality ($)
Material disposals: 200,000
Quality planning: 60,000
Lost contribution margin from current and future sales: 1,400,000
Lost contribution margin from scrapped products: 400,000
Inspecting finished goods: 120,000
Testing equipment: 40,000
Quality reporting: 200,000
Warranty claims: 100,000
In order to reducing total quality costs, the company should focus more on:
a. prevention and appraisal costs
b. appraisal costs
c. Internal and external failure costs
d. prevention costs
127. ________ are costs incurred on defective products before they are shipped to customers:
a. External failure costs
b. Appraisal costs
c. Internal failure costs
d. Prevention costs
128.________ are costs incurred on defective products after they have been shipped to customers.
a. Internal failure costs
b. External failure costs
c. Prevention costs
d. Appraisal costs
129. Information on the static budget and actual results as follows:
| Static Budget (12,000 units) | Actual Results (11,200 units) | |
| Revenue | 600,000 | 571,200 |
| Variable costs | 144,000 | 145,600 |
| Fixed costs | 70,000 | 69,500 |
| Net income | 386,000 | 356,100 |
Net income on the flexible budget is:
a. $355,600
b. $360,267
c. $356,100
d. $425,600
130. Division A sells its products internally to Division B, which in turn, produces B’s products that sell for $10 per unit. Division A incurs costs of $1.25 per unit while Division B incurs additional costs of $5.00 per unit. Assuming the transfer price of A’s production to Division B is set at $2.00 per unit, what amount correctly reflects the company's operating income per unit?
a. $0.75
b. $3.75
c. $2.50
d. $1.25
