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1. Which of the following is not considered a prevention cost?

• Equipment maintenance costs.

• Quality training costs.

• Test and inspection costs.

• Information system costs.

• Supplier assurance costs.

2. Which of the following is a key determinant of productivity?

• Change in process.

• Low costs.

• Control of waste.

• Increased demand.

• High revenues.

3. What is design failure?

• An overall measure of quality is the difference between customer expectations and actual performance of the product or service.

• Customer satisfaction with the total experience of a product or service.

• The extent to which the actual performance of the product matches (or is consistent with) design specifications of the product.

• Costs related to meeting customer demands and quality-related expectations.

• The difference between the actual features of the product (or service) and the features that the customer wants.

The following information for the past year is available from Gas Company, a company that uses machine hours to apply standard factory overhead cost to outputs:

Actual total factory overhead cost incurred	$ 28,000
Actual fixed overhead cost incurred	$ 11,000
Budgeted fixed overhead cost	$ 10,000
Actual machine hours	7,000
Standard machine hours allowed for the units manufactured	4,700
Denominator volumemachine hours	7,500
Standard variable overhead rate per machine hour	$ 3

4. The variable factory overhead efficiency variance is:

• $7,300 favorable.

• $6,900 unfavorable.

• $8,400 favorable.

• $7,800 favorable.

• $7,700 unfavorable.

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