,Managerial Accounting, 16e (Garrison)
Appendix 1A, Cost of Quality
1) ISO 9000 standards were established to make sure that all consumer products incorporate
specific safety features.
Answer: FALSE
Difficulty: 3 Hard
Topic: Cost of Quality
Learning Objective: 01-07 (Appendix 1A) Identify the four types of quality costs and explain
how they interact.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Global; FN Reporting
2) External failure costs are limited to the costs of repairing defective products that are under
warranty.
Answer: FALSE
Difficulty: 3 Hard
Topic: Cost of Quality
Learning Objective: 01-07 (Appendix 1A) Identify the four types of quality costs and explain
how they interact.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Critical Thinking; FN Measurement
3) To minimize its total quality costs, a company should usually try to redistribute its quality
costs more toward prevention and appraisal.
Answer: TRUE
Difficulty: 2 Medium
Topic: Cost of Quality
Learning Objective: 01-07 (Appendix 1A) Identify the four types of quality costs and explain
how they interact.
Bloom's: Understand
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Decision Making
1
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,4) The most effective way to minimize quality costs while maintaining high quality is to avoid
having quality problems in the first place. This is the reason for incurring appraisal costs.
Answer: FALSE
Difficulty: 2 Medium
Topic: Cost of Quality
Learning Objective: 01-07 (Appendix 1A) Identify the four types of quality costs and explain
how they interact.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Critical Thinking; FN Decision Making
5) Quality of conformance refers to the extent to which a product offered by one company is
similar to products offered by other companies.
Answer: FALSE
Difficulty: 2 Medium
Topic: Cost of Quality
Learning Objective: 01-07 (Appendix 1A) Identify the four types of quality costs and explain
how they interact.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Critical Thinking; FN Measurement
6) The costs of lost sales arising from poor quality are always included in quality cost reports.
Answer: FALSE
Difficulty: 2 Medium
Topic: Quality Cost Reports
Learning Objective: 01-08 (Appendix 1A) Prepare and interpret a quality cost report.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: FN Reporting; BB Critical Thinking
7) A quality cost report is usually compiled by the purchasing department to show the added
costs of purchasing higher quality components.
Answer: FALSE
Difficulty: 2 Medium
Topic: Quality Cost Reports
Learning Objective: 01-08 (Appendix 1A) Prepare and interpret a quality cost report.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: FN Reporting; BB Critical Thinking
2
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
, 8) An increase in appraisal costs in a quality improvement program would usually have the
following initial effects on internal and external failure costs:
Internal failure costs External failure costs
A) Increase Increase
B) Increase Decrease
C) Decrease Increase
D) Decrease Decrease
A) Choice A
B) Choice B
C) Choice C
D) Choice D
Answer: B
Difficulty: 3 Hard
Topic: Quality Cost Reports
Learning Objective: 01-07 (Appendix 1A) Identify the four types of quality costs and explain
how they interact.
Bloom's: Understand
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Decision Making
9) Inspection of products would be classified as a(n):
A) prevention cost.
B) appraisal cost.
C) internal failure cost.
D) external failure cost.
Answer: B
Difficulty: 2 Medium
Topic: Cost of Quality
Learning Objective: 01-07 (Appendix 1A) Identify the four types of quality costs and explain
how they interact.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking; FN Measurement
3
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Appendix 1A, Cost of Quality
1) ISO 9000 standards were established to make sure that all consumer products incorporate
specific safety features.
Answer: FALSE
Difficulty: 3 Hard
Topic: Cost of Quality
Learning Objective: 01-07 (Appendix 1A) Identify the four types of quality costs and explain
how they interact.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Global; FN Reporting
2) External failure costs are limited to the costs of repairing defective products that are under
warranty.
Answer: FALSE
Difficulty: 3 Hard
Topic: Cost of Quality
Learning Objective: 01-07 (Appendix 1A) Identify the four types of quality costs and explain
how they interact.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Critical Thinking; FN Measurement
3) To minimize its total quality costs, a company should usually try to redistribute its quality
costs more toward prevention and appraisal.
Answer: TRUE
Difficulty: 2 Medium
Topic: Cost of Quality
Learning Objective: 01-07 (Appendix 1A) Identify the four types of quality costs and explain
how they interact.
Bloom's: Understand
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Decision Making
1
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,4) The most effective way to minimize quality costs while maintaining high quality is to avoid
having quality problems in the first place. This is the reason for incurring appraisal costs.
Answer: FALSE
Difficulty: 2 Medium
Topic: Cost of Quality
Learning Objective: 01-07 (Appendix 1A) Identify the four types of quality costs and explain
how they interact.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Critical Thinking; FN Decision Making
5) Quality of conformance refers to the extent to which a product offered by one company is
similar to products offered by other companies.
Answer: FALSE
Difficulty: 2 Medium
Topic: Cost of Quality
Learning Objective: 01-07 (Appendix 1A) Identify the four types of quality costs and explain
how they interact.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Critical Thinking; FN Measurement
6) The costs of lost sales arising from poor quality are always included in quality cost reports.
Answer: FALSE
Difficulty: 2 Medium
Topic: Quality Cost Reports
Learning Objective: 01-08 (Appendix 1A) Prepare and interpret a quality cost report.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: FN Reporting; BB Critical Thinking
7) A quality cost report is usually compiled by the purchasing department to show the added
costs of purchasing higher quality components.
Answer: FALSE
Difficulty: 2 Medium
Topic: Quality Cost Reports
Learning Objective: 01-08 (Appendix 1A) Prepare and interpret a quality cost report.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: FN Reporting; BB Critical Thinking
2
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
, 8) An increase in appraisal costs in a quality improvement program would usually have the
following initial effects on internal and external failure costs:
Internal failure costs External failure costs
A) Increase Increase
B) Increase Decrease
C) Decrease Increase
D) Decrease Decrease
A) Choice A
B) Choice B
C) Choice C
D) Choice D
Answer: B
Difficulty: 3 Hard
Topic: Quality Cost Reports
Learning Objective: 01-07 (Appendix 1A) Identify the four types of quality costs and explain
how they interact.
Bloom's: Understand
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Decision Making
9) Inspection of products would be classified as a(n):
A) prevention cost.
B) appraisal cost.
C) internal failure cost.
D) external failure cost.
Answer: B
Difficulty: 2 Medium
Topic: Cost of Quality
Learning Objective: 01-07 (Appendix 1A) Identify the four types of quality costs and explain
how they interact.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking; FN Measurement
3
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
