This set of Total Quality Management Multiple Choice Questions & Answers (MCQs) focuses on “Cost of Quality – 2”.
1. Quality cost per hour direct labor is called ________
a) Labor base index
b) Cost base index
c) Sales base index
d) Unit base index
View Answer
Explanation: The quality cost per hour direct labor is called the Labor base index. Bases used to compare with quality costs are labor base, production base, sales base, and unit base. Quality cost bases are used for measuring quality costs.
2. Quality cost per rupee of production cost is called _______
a) Labor base index
b) Cost base index
c) Sales base index
d) Production base index
View Answer
Explanation: The quality cost per rupee of production cost is called the Cost base index. Bases used to compare with quality costs are labor base, production base, sales base, and unit base. Quality cost bases are used for measuring quality costs.
3. Quality cost per rupee of net sales is called _______
a) Labor base index
b) Rupee base index
c) Sales base index
d) Unit base index
View Answer
Explanation: The quality cost per rupee of net sales is called the Sales base index. Bases used to compare with quality costs are labor base, production base, sales base, and unit base. Quality cost bases are used for measuring quality costs.
4. Quality cost per unit of production is called _______
a) Labor base index
b) Rupee base index
c) Sales base index
d) Unit base index
View Answer
Explanation: The quality cost per unit of production is called the Unit base index. Bases used to compare with quality costs are labor base, production base, sales base, and unit base. Quality cost bases are used for measuring quality costs.
5. Timesheets, schedules and minutes of meetings are important sources for collecting/reporting quality costs in an organization.
a) True
b) False
View Answer
Explanation: Timesheets, schedules and minutes of meetings are important sources for collecting/reporting quality costs in an organization. They form a part of the quality cost collection.
6. Expense reports, credit and debit memos and cost estimates are important sources for collecting/reporting quality costs in an organization.
a) True
b) False
View Answer
Explanation: Expense reports, credit and debit memos and cost estimates are important sources for collecting/reporting quality costs in an organization. They form a part of the quality cost collection.
7. What is the other name of intangible costs?
a) Hidden Costs
b) Prevention Costs
c) Appraisal Costs
d) Internal Failure Costs
View Answer
Explanation: The other name of intangible costs is Hidden Costs. They are the cost associated with providing a non-conforming product or service to a customer that is difficult to identify and quantify.
8. Which of the following does not fall under the category of Hidden Costs?
a) Potential loss sales
b) Loss of customer goodwill
c) Offsetting customer dissatisfaction
d) Marketing research
View Answer
Explanation: Potential loss sales, Loss of customer goodwill and Offsetting customer dissatisfaction fall under the category of Hidden Costs. Some of the other hidden costs are customer dissatisfaction cost and loss of company image.
9. Which of the following describes best Juran’s model of optimum quality costs?
a) It includes costs of internal and external failures curve, costs of appraisal and prevention curve and total quality costs curve
b) It includes costs of internal and external failures curve and costs of appraisal and prevention curve
c) It includes costs of internal and external failures curve and total quality costs curve
d) It includes costs of appraisal and prevention curve and total quality costs curve
View Answer
Explanation: It includes costs of internal and external failures curve, costs of appraisal and prevention curve and total quality costs curve. Juran’s model indicates that 100% quality is very effective and that always there must be some defects.
10. The commonly used techniques for measuring quality costs are __________
a) Trend analysis and Pareto analysis
b) Trend analysis only
c) Pareto analysis only
d) Trigonometry
View Answer
Explanation: The commonly used techniques for measuring quality costs are Trend analysis and Pareto analysis. The aim of these techniques is to determine opportunities for quality improvement.
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