Podcast
Questions and Answers
According to Crosby, what costs money in relation to quality?
According to Crosby, what costs money in relation to quality?
- Quality itself
- The actions that involve not doing jobs right the first time (correct)
- Appraisal of quality
- Prevention of quality
What is the performance standard proposed by Crosby?
What is the performance standard proposed by Crosby?
- That's close enough
- High quality
- Zero Defects (correct)
- Quality is free
What is the measurement of quality according to Crosby?
What is the measurement of quality according to Crosby?
- Customer expectations
- Cost of quality
- Price of Nonconformance (correct)
- Operational performance
According to Deming, what does improving quality reduce?
According to Deming, what does improving quality reduce?
What is the optimum quality level according to Deming?
What is the optimum quality level according to Deming?
What does Crosby propose will generate more revenues that exceed the cost of quality?
What does Crosby propose will generate more revenues that exceed the cost of quality?
Which of the following is NOT an example of conformance as an aim of quality assurance?
Which of the following is NOT an example of conformance as an aim of quality assurance?
According to the 1:10:100 rule, how much will one dollar spent on prevention save on failure costs?
According to the 1:10:100 rule, how much will one dollar spent on prevention save on failure costs?
What is the main benefit of using quality costing?
What is the main benefit of using quality costing?
What is the cost of waiting in the context of quality assurance?
What is the cost of waiting in the context of quality assurance?
What is the purpose of collecting and reporting quality cost data?
What is the purpose of collecting and reporting quality cost data?
What is the 1:10:100 rule used for in quality assurance?
What is the 1:10:100 rule used for in quality assurance?
Which of the following is the definition of quality costs?
Which of the following is the definition of quality costs?
What is the purpose of calculating quality costs?
What is the purpose of calculating quality costs?
Quality costs are estimated to be approximately what percentage of costs in the manufacturing industry?
Quality costs are estimated to be approximately what percentage of costs in the manufacturing industry?
Who is responsible for enabling management to understand the implication of quality in terms of money?
Who is responsible for enabling management to understand the implication of quality in terms of money?
How can quality costing be used by senior management, shareholders, and financial institutions?
How can quality costing be used by senior management, shareholders, and financial institutions?
What is the price of nonconformance also known as according to Philip Crosby?
What is the price of nonconformance also known as according to Philip Crosby?
Which of the following is NOT an example of prevention cost?
Which of the following is NOT an example of prevention cost?
Which of the following is an example of an internal failure cost?
Which of the following is an example of an internal failure cost?
What is the difference between prevention costs and appraisal costs?
What is the difference between prevention costs and appraisal costs?
Which of the following is an example of an external failure cost?
Which of the following is an example of an external failure cost?
What is the difference between internal failure costs and external failure costs?
What is the difference between internal failure costs and external failure costs?
Which of the following is NOT a classification of quality costs?
Which of the following is NOT a classification of quality costs?
Which of the following is a step in preparing to measure costs of quality?
Which of the following is a step in preparing to measure costs of quality?
What is the term used to describe the methodology that measures the cost and performance of resources, activities, and cost objects?
What is the term used to describe the methodology that measures the cost and performance of resources, activities, and cost objects?
What is the main focus of Activity Based Management (ABM)?
What is the main focus of Activity Based Management (ABM)?
What was the term 'activity-based costing' created by?
What was the term 'activity-based costing' created by?
What is one of the benefits associated with Activity Based Costing (ABC)?
What is one of the benefits associated with Activity Based Costing (ABC)?
What is the cost of achieving quality improvements and increased productivity often considered to be?
What is the cost of achieving quality improvements and increased productivity often considered to be?
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Study Notes
Quality Costs and Management
- According to Crosby, it is the price of nonconformance that costs money in relation to quality.
- Crosby proposes a performance standard of "zero defects" and measures quality as conformance to specifications.
- Improving quality reduces the cost of rework, inspection, and testing, as well as improves productivity, according to Deming.
- The optimum quality level, according to Deming, is the point where the cost of improving quality equals the cost of failure.
Quality Costing
- Crosby proposes that investing in quality will generate more revenues that exceed the cost of quality.
- The 1:10:100 rule states that one dollar spent on prevention saves ten dollars on appraisal and correction, and one hundred dollars on failure.
- The main benefit of using quality costing is to identify areas for improvement and optimize resource allocation.
- The cost of waiting is the cost of not taking action to improve quality.
Classification of Quality Costs
- Prevention costs include investments in quality planning, training, and process design.
- Appraisal costs include the cost of inspecting and testing products.
- Internal failure costs include the cost of rework, scrap, and downtime.
- External failure costs include the cost of warranty claims, repairs, and replacements.
- The difference between prevention costs and appraisal costs is that prevention costs aim to prevent defects, while appraisal costs aim to detect defects.
Activity-Based Costing (ABC)
- The term used to describe the methodology that measures the cost and performance of resources, activities, and cost objects is Activity-Based Costing (ABC).
- The main focus of Activity-Based Management (ABM) is to improve the efficiency of activities and processes.
- ABC was created by Robert Kaplan and Robin Cooper.
- One of the benefits associated with ABC is that it helps organizations identify and eliminate non-value-added activities.
- The cost of achieving quality improvements and increased productivity is often considered to be an investment in quality.
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