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D. Warranty, product liability, prevention, and C. Product quality control is designed to balance the
appraisal. marketability of higher quality against the cost of
attaining higher quality.
[2] Source: CMA 0691 3-23 D. Product quality control is more important than
The cost of scrap, rework, and tooling changes in a process quality control.
product quality cost system are categorized as a(n)
B. A 6.5% commission on all sales with no base C. Recorded individually on receiving reports.
salary.
D. Used by one department at a time.
C. $1,200 per month plus a 3% commission on all
sales.
[8] Source: CIA 0585 III-28
D. $1,750 per month with a 10% increase after 6 Which of the following is not implied by the definition of
months if sales equal or exceed the average. control?
B. Feedback controls. A. Plant managers must set annual goals for reducing
scrap loss. They issue monthly scrap loss reports to
C. Feedforward controls. the vice president of manufacturing, who monitors
losses and follows up to ensure that each plant
D. Preventive controls. manager is taking appropriate action to meet his/her
goals. Plant managers receive a bonus if they reduce
losses below the established goal.
[10] Source: CIA 1186 III-13
Of the following, the type of controls that are often difficult B. Data entry operators must key data at the rate of
to audit because of the lack of criteria or standards are five documents per minute after they have completed
training. The input rate of each operator is
A. Preventive controls. automatically monitored by the computer system.
Operators who fall below the standard may be
B. Financial controls. retrained or terminated at the discretion of the data
entry supervisor.
C. Corrective controls.
C. All employees receive a bonus of 2% of their
D. Operating controls. annual salary if reworked production is reduced at
least 5% company-wide from the previous calendar
year.
[11] Source: CIA 1186 III-14
In a diamond-cutting operation, the most cost-effective D. Records of returned merchandise will be recorded
controls would be by each store manager on a form. This form cites the
reason for the return, the dollar amount of the sale,
A. Preventive control (establishing specific standards the type of merchandise returned, the date of
for raw materials). purchase, and the condition of returned merchandise.
One copy of this form is sent to the regional and
B. Corrective control (replacing or repairing defective home offices each month.
items prior to shipment).
C. Detective control (increasing the level of [15] Source: CIA 1190 III-4
inspection). Because of vulnerability to fraud, the trust department of a
bank required that an officer other than the trust officer
D. Feedback control (monitoring final results and verify income distribution orders and sign disbursement
reporting deviations). checks. Which type of control is typified by such
segregation of duties?
B. Middle management.
[16] Source: CIA 1190 III-13
C. First-line management. A new auditor is being briefed on various types of audits by
the audit supervisor. The supervisor states that some areas
D. Non-managerial employees. within the organization are more difficult to audit because
the controls ordinarily are not as clearly defined as in other
departments. Select the type of control that is usually most
[13] Source: CIA 1187 III-10 difficult to assess.
Budgetary control sets a numerical standard of results to be
achieved within an organization. Budgetary control is A. Operational.
classified as
B. Accounting.
A. An operating control.
C. Physical security.
B. A process control.
D. Input.
C. An adaptive control.
[17] Source: CIA 1190 III-14
A company is experiencing a high level of customer returns D. Feedforward.
for a particular product because it does not meet the rigid
dimensions required. Each return is reworked on a milling
machine and sent back through all of the subsequent [22] Source: CIA 1191 III-11
finishing steps. This is a costly process. Identify the best The operations manager of a company notified the
method for reducing the quality failure costs. treasurer of that organization 60 days in advance that a
new, expensive piece of machinery was going to be
A. Customer surveys. purchased. This notification allowed the treasurer to make
an orderly liquidation of some of the company's investment
B. Increased finished goods inspections. portfolio on favorable terms. What type of control was
involved?
C. Defect prevention.
A. Feedback.
D. Increased work-in-process inspections.
B. Strategic.
A. Feedback control.
[19] Source: CIA 0591 III-16
Managerial control can be divided into feedforward and B. Feedforward control.
feedback controls. Which of the following is an example of
a feedback control? C. Production control.
[20] Source: CIA 0591 III-43 A. Budgeting, financial ratio analysis, and cash
Feedforward controls are very important to management management.
because they
B. Objectives, standards, and an evaluation-reward
A. Suggest corrective actions needed when system.
deviations occur.
C. Role analysis, team building, and survey feedback.
B. Assist management in anticipating problems.
D. Setting goals, empowering employees, and job
C. Are the most economical form of control. enrichment.
C. Kanban.
[35] Source: CMA 1292 3-25
D. Participative management. Performance reports should be formatted and designed to
meet organizational needs. In this regard, performance
reports normally include all of the following except
[30] Source: CMA 0694 3-17
An example of an internal failure cost is A. A relationship to the organizational structure.
C. Inventory turnover in days, the current ratio, and [41] Source: CMA 0693 3-21
return on equity.
Which one of the following organizational policies is most
D. Accounts receivable turnover, inventory turnover likely to result in undesirable managerial behavior?
in days, and the current ratio.
A. Patel Chemicals sponsors television coverage of
cricket matches between national teams representing
[38] Source: CMA 0693 3-13 India and Pakistan. The expenses of such media
Product-quality-related costs are part of a total quality sponsorship are not allocated to its various divisions.
control program. A product-quality-related cost incurred in
detecting individual products that do not conform to B. Joe Walk, the chief executive officer of Eagle
specifications is an example of a(n) Rock Brewery, wrote a memorandum to his
executives stating, "Operating plans are contracts and
A. Prevention cost. they should be met without fail."
A. The use of residual income to measure divisional [46] Source: CMA 0696 3-5
performance can cause goal congruence problems for The process of developing plans for a company's expected
corporations with divisions that have unequal operations and controlling the operations to help carry out
operating asset bases. those plans is
A. Preventive maintenance.
[45] Source: CMA 1295 3-12
The four categories of costs associated with product quality B. Inspection of completed goods.
costs are
C. Close supervision of production-line workers.
A. External failure, internal failure, prevention, and
carrying. D. Measuring performance against a standard.
Yes Yes
C. [57] Source: Publisher
Which of the following is the best example of why an
No Yes employee would resist modifying his/her performance for a
D. control system?
[53] Source: Publisher B. The employee believes that the control system sets
Benefits of employee participation in the design of control the standard of performance too high.
systems include all of the following except
C. People tend to avoid pleasant situations.
A. Development of a perception by those being
evaluated that the process is fair. D. The control system establishes a standard of
performance that the employee considers relevant to
B. Communication to everyone involved of the need what (s)he regards as their primary job objective.
for control.
A. Exogenous variables.
B. Decision variables.
C. Performance criteria.
D. Constraints.
Category Amount
--------------------- ------
Rework $ 725
Equipment maintenance 1,154
Product testing 786
Product repair 695
What is Watson's total prevention and appraisal cost for
last month?
A. $786
B. $1,154
C. $1,940
D. $2,665
A. Warranty claims.
B. Design engineering.
C. Supplier evaluations.
B. Training cost.
D. Appraisal cost.