Question

1) Which of the following would be considered an appraisal cost of quality?

A) training workers to perform their jobs

B) purchasing better tools for workers to perform their jobs

C) repairing an item under warranty

D) running a functional test on each item before it is boxed for shipment

2) A U.S. car company knowingly released cars for sale with defective fuel lines which caused the cars to spontaneously explode, resulting in multiple deaths. After the cause of failure was found to be deliberate negligence, the company subsequently suffered decreased market share, and a reduction in stock price. This company incurred:

A) an internal failure cost.

B) an ethical failure cost.

C) am external failure cost.

D) an appraisal cost.

3) Improving quality seems to be a strategic weapon in gaining market share. However, improving quality entails allocation of resources and effort. As greater effort is expended to stop defects before they occur, which one of the following costs increases?

A) prevention costs

B) appraisal costs

C) internal failure costs

D) external failure costs

4) Which one of the following statements is TRUE?

A) Appraisal costs decrease as quality level decreases.

B) Appraisal costs increase as the variation of output increases.

C) Appraisal costs increase as the variation of output decreases.

D) Appraisal costs stay the same regardless of quality level

5) When errors have been made while producing a product such that the item must be discarded, the resultant cost is called a(n):

A) warranty.

B) scrap cost.

C) rework cost.

D) external failure cost

Answer 1

1)

D) running a functional test on each item before it is boxed for shipment

Appraisal costs are the inspection costs incurred by the company when it does an inspection of the products before shipping them to the customers

2)

B) an ethical failure cost

The company knew about the defects and yet chose to release. This is an unethical act. It suffered a loss because of this

3)

A) Prevention costs

Prevention costs are those incurred by a company due to the steps it takes to prevent defects from occurring.

4)

D) Appraisal costs stay the same regardless of quality level

Appraisal costs are due to inspecting certain amount of goods. The cost is the same whether the goods are defective or non-defective

5)

B) scrap cost.

A discarded item is called a scrap