Why might a common set of global quality standards be needed or desirable? Most large companies view their markets on an international rather than a domestic basis. To compete effectively in a global environment, companies must recognize the need for, and be willing to initiate, compliance with a variety of international standards. Standards are essentially the international language of trade; they are formalized agreements that define the various contractual, functional, and technical requirements to assure customers that products, services, processes, and/or systems do what they are expected to do. ISO A primary international guideline for quality standards is the ISO 9000 series. This series was developed by the International Organization for Standardization (ISO), based in Geneva, Switzerland. Topics of the ISO 9000 “family” of standards are listed in Exhibit 17–17 (p. 766). The ISO quality standards are written in a general manner and prescribe the generic design, material procurement, production, quality control, and delivery procedures necessary to achieve quality assurance. The directive is not a product standard and does not imply that companies certified under it have better products than competitors. The family of standards articulates what must be done to ensure quality, but management must decide how to meet the standards. Compliance with ISO standards is required for regulated products sold in the European Union; however, there is no single organization that administers the program. Thus, companies seeking ISO certification must qualify under an internationally accepted registration program that is administered by a national registrar. Examples of such registrars in the United States and Great Britain are, respectively, Underwriters Laboratories and the British Standards Institution. After an internal review, a company deciding that it can meet the standards may apply for ISO registration. To be registered, a company must first submit to a quality audit by a third-party reviewer that encompasses a review of product design activities, manufacturing processes and controls, quality documentation and records, and management quality policy and philosophy. After registration, teams visit the company biannually to monitor compliance. Although registration costs are high, certified companies believe the benefits are even higher. Internally, certification helps ensure higher process consistency and quality and should help to reduce costs. Externally, ISO-certified companies have an important distinguishing characteristic from their noncertified competitors. Additionally, certified companies are listed in a registry of “approved” suppliers, which should increase business opportunities. The cost–benefit relationships of the quality system must be measured, documented, and reported under ISO requirements—all jobs for accountants…..
> Your company is interested in developing information about quality but has a traditional accounting system that does not provide such information directly. In a three- or four-person team, prepare a set of recommendations about how to improve the company
> The following production information about quality costs has been gathered for June 2010: Total defective units ……………………………………………..580 Number of units reworked ……………………………………380 Number of units returned …………………………………….100 Total prevention cost …………………………
> Use the Internet to find four definitions of quality. a. Compare and contrast each of the four definitions with specific emphasis on whether the definition includes conformity or customer orientation. b. Assume that you are the manager of (1) a copy stor
> Idaho Industrial is a medium-size manufacturing corporation in a capital-intensive industry. Currently, actual profits are not meeting expectations. As a result, investment funds are limited and hiring is restricted. These consequences of the corporation
> By building quality into a process rather than having quality inspections at the end of the process, certain job functions (such as that of quality control inspector) can be eliminated. Additionally, the installation of automated equipment to monitor pro
> Johnson Consumer Electronics operates in an industry in which the demand for products is cyclical and often unpredictable. Discuss a strategy for dealing with uncertainty associated with the cycles that would be appropriate for Johnson Consumer Electroni
> Assume that you are in the market for a new car. Since your promotion at work, price is no object. You are considering purchasing a Porsche, but your spouse has suggested the purchase of a Kia. a. What do you perceive to be Porsche’s strategy relative to
> What is a quality audit? Most large companies view their markets on an international rather than a domestic basis. To compete effectively in a global environment, companies must recognize the need for, and be willing to initiate, compliance with a variet
> Assume that you are a management consultant who advises manufacturing firms regarding production technologies. One of the hot issues you often discuss with management is whether a pull system or a push system is superior in a particular situation. Consid
> Omaha Metal Products manufactures a variety of industrial products from stock metal components. The firm is engaged in its annual process of budgeting costs and revenues for the coming year. The cost of metal consumes approximately 50 percent of total re
> How can Pareto analysis help focus managerial efforts on reducing the costs of quality related problems?
> How is technology affecting supply-chain purchasing practices and transaction costs?
> In 2002, a green engineering case study about automobile emissions and saving energy was performed. The study generated designs for both gasoline- and diesel-powered automobiles with the following characteristics: a mid-size sedan that would get 52 miles
> What types of discretionary costs are subject to control as engineered costs? Provide several examples.
> Choose one product and one service with which you are well acquainted. Indicate how the product and service each meet (or do not meet) the eight overall quality characteristics. For the service, indicate how it meets (or does not meet) the three addition
> Go to the Web site for the Malcolm Baldrige National Quality Award and find the questionnaire titled “Are We Making Progress?”. a. Download the questionnaire and answer the questions relative to your place of employment or university. Ask four of your co
> Business process reengineering and downsizing often occur together. Why?
> In conducting activity analyses, the presence of certain activities indicates low production process quality. List five of these activities.
> How does the cost control system interact with the overall cost management system?
> Tyler Tubing’s management has been evaluating company policies with respect to control of costs of corrugated metal, one of the firm’s major component materials. The firm’s controller has gathered the following financial data, which may be pertinent to c
> How does the implementation of open-book management require an organization’s accountants to change their traditional practices?
> You have been assigned the task of projecting the cost of 2011 employee fringe benefits for your firm and have identified number of employees, total labor hours, and total labor cost as candidate independent variables for use in the estimation equation.
> Open-book management is a relatively new philosophy about the use of information in organizations. Describe open-book management and how it differs philosophically from the traditional view of the management of financial information in an organization
> New strategic alliances are formed every day. What are they, and why are they increasingly being used by businesses?
> What is an enterprise resource planning (ERP) system? How do ERP systems improve on prior generations of information systems?
> Besides increasing globalization, what trends within the United States are causing firms to seek more diversified workforces?
> How has the globalization of firms affected the diversity of their employees? Why has increased diversity put an additional burden on accounting systems?
> Describe “downsizing,” its causes, and its primary risks.
> Describe the three generic strategies for dealing with the environmental effects of operations. Is one of the strategies always preferred to the others? Discuss.
> What is business process reengineering? Does it lead to radical or modest changes in business practices? Discuss.
> IMeg manufactures various electronic assemblies that are sold primarily to computer manufacturers. IMeg’s reputation has been built on quality, timely delivery, and products that are consistently on the cutting edge of technology. IMeg’s typical product
> How would switching from a traditional manufacturing system to a flexible manufacturing system affect a firm’s inventory and production control systems?
> What changes must occur in a production environment to effectively implement JIT? Why are these changes necessary?
> You are employed by a firm engaging in heavy manufacturing. Its direct materials are sourced globally, but its non operating inputs are sourced from a variety of U.S. vendors. You have been charged with making a presentation to the CFO about the benefits
> What are the primary goals of the JIT philosophy, and how does JIT attempt to achieve these goals?
> What is kaizen costing, and how does it differ from target costing?
> Why does the development stage have such a significant influence on a product’s profitability over its life cycle?
> What is target costing, and how is it useful in assessing a product’s total life cycle cost?
> How does a product’s life cycle stage influence production cost management?
> Differentiate between the push and pull systems of production. Is JIT a push or a pull system?
> What is Pareto inventory analysis? Why do A items and C items warrant different inventory control methods? What are some methods that can be employed to control C items? Companies making purchasing (rather than production) decisions often compute the eco
> Gale’s Garden grows and sells a variety of indoor and outdoor plants and garden vegetables. One of the firm’s more popular vegetables is a red onion, which has an annual sales quantity of approximately 30,000 pounds. T
> How are ordering costs and carrying costs related? Companies making purchasing (rather than production) decisions often compute the economic order quantity (EOQ), which represents the least costly number of units to order. EOQ indicates the optimal balan
> What is the theory of constraints? How is this concept appropriate for manufacturing and service companies?
> What is the Malcolm Baldrige National Quality Award? Why would an organization apply for that award?
> New England Automotive manufactures aftermarket automobile parts that are sold in a variety of outlets including auto parts stores and discount retailers. The following account data (in millions) have been taken from a recent balance sheet: Current Asset
> What is TQM? What are the four important tenets of TQM, and why are they important?
> Describe four types of benchmarking. Use the Internet to find a company that has engaged in benchmarking. Describe the type of benchmarking used and the benefits and costs of the company’s experience.
> Compare and contrast the eight characteristics that constitute overall quality from the customer’s perspective with the three additional characteristics that constitute service quality from the customer’s perspective.
> Compare and contrast the EFQM Excellence Model with the Malcolm Baldrige National Quality Award criteria. Most large companies view their markets on an international rather than a domestic basis. To compete effectively in a global environment, companies
> What factors create uncertainty when estimating future costs and revenues?
> Recent years have been characterized by high, and volatile, energy prices. Some critics of the energy industry suggest that the oil companies’ use of JIT inventory management has contributed to the volatility in prices and the supply constraints. Further
> What are the four generic approaches to reducing uncertainty? Describe the context in which each approach is typically used.
> How does strategic cost management link information to corporate strategies?
> Why do firms hold cash balances? Why do some firms hold larger cash balances than other firms?
> In the production–sales cycle, what are the four points at which quality costs are incurred? How are these costs interrelated through these points?
> Assume that Honda Motor Co. Ltd. paid for a full page advertisement in The Wall Street Journal. The ad neither discussed any Honda products nor referred to year-end earnings or a new stock issuance. Instead, the ad informed readers that “buying quality p
> Define the terms efficiency and effectiveness and distinguish one from the other. Why is measuring the efficiency of discretionary costs often difficult? Explain how the effectiveness of discretionary cost activities can be measured.
> Why is it often difficult to measure the output of activities funded by discretionary costs?
> Differentiate between committed and discretionary costs. Could a cost be considered discretionary by one firm and committed by another? If so, discuss and give an example. If not, discuss why not.
> What factors can cause costs to change? Which of these factors are subject to cost containment and which are not? What creates the difference in controllability?
> At what points in time is cost control for any specific organizational activity exercised? Why are these points of cost control important?
> Wisconsin Wire (WW) has implemented a just-in-time inventory system for the production of its insulated wire. Inventories of raw material and work in process are so small that WW uses a Raw and In-Process account. In addition, almost all labor operations
> Why does the general control model begin with planning activities?
> What is meant by the term quality? In defining quality, from what two perspectives can a definition be formulated? Why are both important?
> Strategic alliances and joint ventures are being used with increasing frequency to exploit market opportunities. Virtually all larger firms are involved in several to many strategic alliances. a. From the perspective of controlling the quality of product
> Employees expect that all parties will honor their explicit and implicit obligations. Distrust occurs when these obligations are not met or when the parties have different expectations regarding the obligations. When downsizing is employed as an organiza
> Borders and Amazon .com are competitors in vending books and other consumer items. The two are differentiated to an extent by their marketing strategies. Although Amazon.com relies exclusively on Internet marketing, Borders operates both retail stores an
> Find a company’s Web site that provides information on the characteristics that are desired for that company when establishing long-term/preferred supplier relationships. a. What characteristics are listed? Why do you think each of these is important? b.
> Dayna Moore, CEO of Layton Transmissions, sat dejected in her chair after reviewing the 2011 first-quarter financial reports on one of the company’s core products: a standard, five-speed transmission (product #2122) used in the heavy equipment industry i
> Automakers provide an interesting study in cost management strategies. General Motors often provides a contrast to other U.S. manufacturers. For example, Chrysler and Ford opted to outsource many product components, but GM continues to manufacture a much
> Most experienced CEOs have seen command-and control management come and go. They’ve been through downsizing and rightsizing. Now they’re seeing most companies (their own included) working to recast themselves as ‘high-performing’ organizations, with stre
> One of the key drivers of downsizing and outsourcing is globalization. Recently, the Organization for Economic Cooperation and Development (OECD) acknowledged “growing unease about globalization.” The organization expressed concerns that in some countrie
> Allridge University formed a new department to recruit top out-of-state students. The department’s funding for 2010 was $1,600,000, and the department was given the goal of recruiting 600 new nonresident students. By year-end 2010, the department was cre
> Most accounting professionals would agree that the accounting profession has developed effective tools for measuring and reporting events involving tangible assets. Most might also agree that the profession has miles to travel to report as effectively on
> The chapter discusses three approaches to managing environmental costs. Some strategies deal with hazardous waste only after it has been produced. a. Does a firm have any ethical obligations not to produce hazardous waste regardless of how successfully i
> Cosmo Industries recorded the following transactions for its first month of operations: Because Cosmo employs JIT, the company’s CEO has asked how the accounting system could be simplified. a. Prepare the journal entries, assuming that
> Indicate by letter which of the three categories apply to the following features of just-in-time systems. Use as many letters as appropriate. D = desired intermediate result of using JIT U = ultimate goal of JIT T = technique associated with JIT a. Reduc
> Horizon Resins has experienced serious problems as a result of attempts to manage its impacts on the environment. To illustrate the problems, consider the following events, which occurred during the past five years: • Horizon was assessed $75 million in
> In early 2007, Burger King, under pressure from animal rights activists including People for Ethical Treatment of Animals (PETA), announced it would start purchasing pork and eggs from suppliers that use cage-free animal management methods. In its announ
> Nanotechnology may be the future of manufacturing. The term refers to any area of research that deals with objects one-tenth the size of an atom. According to the Center for Responsible Nanotechnology and given the current rate of development, general-pu
> Altazar Electronics has identified the following 2010 warranty costs for one of the company products. The information has been categorized according to the type of product failure. a. Rearrange the rows in descending order of magnitude based on the Tota
> Go to the Web site for the Malcolm Baldrige National Quality Award and find the answers to the following questions: a. When and why were the health and education categories established? b. How do the criteria for the health, education, and manufacturing
> Three possible goals for a business are to (1) maximize profits, (2) maximize shareholder wealth, and (3) satisfy customer wants and needs. If goal (1) or (2) is chosen, the primary measurements of “success” are organizational profitability or stock pric
> In 2008, pharmaceutical company Genentech withdrew its psoriasis drug Raptiva from the market because it was linked to a rare but often fatal brain disorder (progressive multifocal leukoencephalopathy) in patients who used the medication. There were abou
> Many companies are becoming ISO certified because of customer requests and because of the need to compete in the global marketplace. a. Why do you think customers are insisting that suppliers meet ISO 9001:2000 standards? b. Does meeting ISO 9001:2000 st
> Choose an organization with which you have a solid familiarity (this may even be your fraternity, sorority, or college). You have been placed in charge of initiating a quality culture in that organization. Access at least four Web sites that refer to thi
> Houston Health Clinic has used funds during 2010 for the following purposes: a. Sent two cost accounting staff members to seminars on activity-based costing. b. Purchased a kidney dialysis machine. c. Built an attached parking garage for the clinic. d. R
> Assume that you are in charge of Physicians Social Service Agency, which provides counseling services to low-income families. The agency’s costs have been increasing with no corresponding increase in funding. In an effort to implement some cost reduction
> Laura Johnson, Technical Instruments Division manager of Worldwide Electronics, attended a 30-minute seminar on open book management recently. As a result of the seminar, she decided to implement some open-book management practices in her division. She b
> BreatheWell is very aware that its scuba diving tanks must be of the highest quality to maintain its reputation of excellence and safety. The company has retained you as a consultant and you have suggested that quantifying the costs would be important to
> Golf courses are demanding in their quest for high-quality carts because of the critical need for lawn maintenance. Antaris Co. manufactures golf carts and is a recognized leader in the industry for quality products. In recent months, company managers ha
> Elijah Electronics makes PDAs. The firm produced 45,000 PDAs during its first year of operation. At year-end, it had no inventory of finished goods. Elijah sold 42,300 units through regular market channels, but 450 of the units produced were so defective
> In mid-2007, numerous findings of unsafe products produced in China were disclosed, including pet food, fish, toothpaste, toys, and fireworks. In early 2008, the FDA pointed to Chinese companies as the source of contaminated heparin, a widely used blood
> Wilson Ceramics manufactures holiday ornaments in its sole plant located in Wisconsin. Because the demand for the company’s products is very seasonal, the company builds inventory throughout the first nine months of the year and draws down inventory the
> After reviewing financial results for 2010, Chicago Cannery’s president sent the following e-mail to his CFO and controller, Willie Logan. Dear Willie: I’m disappointed in the financial results for the year just completed. As you know, profits were $2 mi
> As an accounting intern working for your local police department, you learn that the department is considering starting a citizen’s police academy. In recent years, there have been events that have created friction between the police department and the c
> Your employer, Lawson Brake Systems, implemented an e-procurement system last year for purchasing nonoperating inputs. The installation has been such a success that the firm is now considering using the same system to acquire operating inputs (e.g., dire
> The financial results for the Business Education Department of Omega Educational Services Corporation for November 2010 are presented in the schedule at the end of this problem. Caroline Roper, president of Omega Educational Services, is pleased with the
> Choose letter C (for committed cost) or D (for discretionary cost) to indicate the type of each of the following described costs. Explain the rationale for your choice. a. Control is first provided during the capital budgeting process. b. Typical example
