C) internal failure cost. D) prevention cost.
Answer: A
231) The cost of evaluating potential raw material suppliers is an example of a(n)
A) appraisal cost. B) prevention cost.
C) internal failure cost. D) external failure cost.
Answer: B
232) The cost of improved production equipment and production processes is a(n)
A) appraisal cost. B) external failure cost.
C) internal failure cost. D) prevention cost.
Answer: D
233) The cost of product liability claims is an example of a(n)
A) external failure cost. B) internal failure cost.
C) prevention cost. D) appraisal cost.
Answer: A
234) The lost profits from lost customers are an example of
A) appraisal costs. B) prevention costs.
C) internal failure costs. D) external failure costs.
Answer: D
235) The cost of training production personnel on their job tasks is an example of a(n)
A) external failure cost. B) appraisal cost.
C) internal failure cost. D) prevention cost.
Answer: D
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236) Production loss caused by downtime is an example of what type of cost?
A) Appraisal cost B) Prevention cost
C) Internal failure cost D) External failure cost
Answer: C
237) Costs incurred to detect poor quality goods and services refer to
A) appraisal costs. B) activity- based costing.
C) value engineering. D) prevention costs.
Answer: A
238) Costs incurred to avoid poor quality goods or services are considered
A) appraisal costs. B) activity- based costing.
C) value engineering. D) prevention costs.
Answer: D
239) Which of the following terms best describes costs incurred to avoid poor quality goods or services?
A) Appraisal costs B) Activity- based costing
C) Value engineering D) Prevention costs
Answer: D
240) Which of the following terms best describes costs incurred to detect poor quality goods or services?
A) Appraisal costs B) Activity- based costing
C) Value engineering D) Prevention costs
Answer: A
241) Which term listed below describes costs incurred when the company detects poor quality goods or services
before delivery to the customer?
A) Lean production B) External failure costs
C) Internal failure costs D) Value added activity
Answer: C
242) Which term listed below describes costs incurred when the company fails to detect poor quality goods or
services?
A) Value- added activity B) Just- in-time production
C) External failure costs D) Internal failure costs
Answer: C
243) Which term below best describes the quality cost category for "cost to re- inspect reworked food processors"?
A) Prevention costs B) Appraisal costs
C) Internal failure costs D) External failure costs
Answer: C
244) Which term below best describes the quality cost category for "cost of warranty repairs on food processors"?
A) Prevention costs B) Appraisal costs
C) Internal failure costs D) External failure costs
Answer: D
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245) Which term below best describes the quality cost category for "cost of testing food processors before sale"?
A) Prevention costs B) Appraisal costs
C) Internal failure costs D) External failure costs
Answer: B
246) Which term below best describes the quality cost category for "preventive maintenance on machinery"?
A) Prevention costs B) Appraisal costs
C) Internal failure costs D) External failure costs
Answer: A
247) Which term below best describes the quality cost category for "lost profits from lost sales"?
A) Prevention costs B) Appraisal costs
C) Internal failure costs D) External failure costs
Answer: D
248) What external failure cost is very difficult to estimate?
A) Warranty Costs B) Cost of service calls
C) Sales returns and allowances D) Lost profits from lost customers
Answer: D
Use the information below to answer the following question(s).
Dylan Products has a budget of $1,200,000 in 202X for prevention costs. If it decides to automate a portion of its prevention activities, it
will save $90,000 in variable prevention costs. The new method will require $40,000 in training costs and $150,000 in annual equipmen
costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level
is 210,000 units.
Appraisal costs for the year are budgeted at $500,000. The new prevention procedures will save appraisal costs of $50,000. Internal
failure costs average $20 per failed unit of finished goods. The internal failure rate is expected to be 4% of all completed items. The
proposed changes will cut the internal failure rate by one- half. Internal failure units are destroyed. External failure costs average
$48 per failed unit. The company's average external failures average 2.5% of units sold. The new proposal will reduce this