Question

In: Accounting

The Management Accountant is considering introducing a system of Total Quality Management as recent productivity reports...

The Management Accountant is considering introducing a system of Total Quality Management as recent productivity reports have shown an increase in defective output. This has tarnished the reputation of the company.

The company produces confectionary products and sells to various retailers.

Required:

1) What do you understand by a system of Total Quality Management?

2) What are the various category of TQM related costs. Give an example of each as it relates to the company.

Solutions

Expert Solution

Total Quality Management
1) Total Quality Management or TQM is a people focused management system that aims at continual increase in customer satisfaction at continually lower real cost.
There is a sustained management commitment to quality and everyone in the organization and the supply chain is responsible for preventing rather than detecting defects
TQM is a total system approach(not a separate area or program) and an integral part of high level strategy. It works horizontally across functions and departments,
involves all employees, top to bottom, and extends backward and forward to include the supply chain and the customer chain.
TQM stresses learning and adaptation to continual change as keys to organiszational success.
According to TQM, quality management should be spread over all the departments, and should not focus on merely sorting good products from bad
Categories of TQM Related Costs
2) a) Prevention Costs
These are the costs of all activities specifically designed to
prevent poor quality in products or services
Examples are the costs of new product
review, quality planning, supplier capability surveys, process capability evaluations, quality
improvement team meetings,
quality improvement projects, and quality education and
training.
b) Appraisal Costs
The costs associated with measuring, evaluating, or auditing
products or services to assure conformance to quality standards and performance
requirements
These include the costs of incoming and source inspection/test of
purchased material, in-process and final inspection/test, product, process, or service
audits,
calibration of measuring and test equipment, and the costs of associated supplies
and materials.
c) Failure Costs
The costs resulting from products or services not conforming to
requirements or customer/user needs. Failure costs are divided into internal and external
failure cost categories
(i) Internal Failure Costs
Failure costs occurring prior to delivery or shipment of the
product, or the furnishing of a service, to the customer.
Examples are the costs of scrap,
rework, reinspection, retesting, material review, and downgrading.
(ii) External Failure Costs
Failure costs occurring after delivery or shipment of the
product, and during or after furnishing of a service, to the customer
Examples are the
costs of processing customer complaints, customer returns, warranty claims, and product
recalls.
c) Total Quality Costs
The sum of the above costs. It represents the difference
between the actual cost of a product or service, and what the reduced cost would be if
there were no possibility
of substandard service, failure of products, or defects in their
manufacture
# Quality cost reports can be used to point out the strengths and weaknesses of a
quality system.
# Improvement teams can use them to describe the monetary benefits and
ramifications of proposed changes

Related Solutions

as a management accountant , how and when will you use flash reports?
as a management accountant , how and when will you use flash reports?
characteristics of a good leader - Total Quality Management
Describe the characteristics of a good leader how important is it for the good leader and how good leader put influence on others
What is the primary focus of Total Quality Management?
What is the primary focus of Total Quality Management?
Define quality, quality control, quality assurance, total quality management, corporates social resposibility.
Define quality, quality control, quality assurance, total quality management, corporates social resposibility.
Interim Quality Performance Reports Good quality cost management requires that quality costs be reported and controlled...
Interim Quality Performance Reports Good quality cost management requires that quality costs be reported and controlled (control having a cost reduction emphasis). Control enables managers to compare actual outcomes with standard outcomes to gauge performance and take any necessary corrective actions. The total quality management standard is the robust zero-defects standard. This standard requires that goods and services be produced that meet the targeted value of specified quality characteristics. Achieving zero defects typically requires years and so a variety of...
The implementation of realistic time management plans can improve productivity and the quality of life”. As...
The implementation of realistic time management plans can improve productivity and the quality of life”. As a project manager, discuss the key steps for creating realistic and successful time management plans.
Total quality management emphasizes A.  a process where mostly statisticians get involved. B.  a system where...
Total quality management emphasizes A.  a process where mostly statisticians get involved. B.  a system where strong managers are the only decision makers. C. the responsibility of the quality control staff to identify and solve all quality-related problems. D. ISO 14000 certification E. a commitment to quality that goes beyond internal company issues to suppliers and customers.
Provide an overview of the objectives and goals of Total Quality Management How might the Total...
Provide an overview of the objectives and goals of Total Quality Management How might the Total Quality Management (TQM) be used in a Supply Chain environment?
(a) How could TQM (total quality management) tools be used for improving the service quality of...
(a) How could TQM (total quality management) tools be used for improving the service quality of an airline (provide specific examples illustrating the use of specific tools)? (b) Provide examples of internal and external failure costs relevant to an airline. (c) There are four categories of costs of quality. Which categories are captured in the quality loss function? Which category is relatively difficult to measure? Why? (questions can be answered in bullet points)
Numerous factors affect Productivity. Typically they can be categorized into methods, capital, quality, technology, and management....
Numerous factors affect Productivity. Typically they can be categorized into methods, capital, quality, technology, and management. Select a specific organization and describe a situation where one of factors mentioned previously had a significant impact. Why was this factor important? What was done correctly in this situation? What could have been done better? What lessons did you gain from this situation?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT