If Management Is Reviewing a Multiple-Period Trend Graph That Shows

question 164

Multiple Choice

If management is reviewing a multiple-period trend graph that shows individual quality cost categories, what might they expect to see?

• A)Overall quality costs decreasing as a percentage of sales with prevention costs, as a category, increasing over time.
• B)Overall quality costs decreasing as a percentage of sales with all categories decreasing over time.
• C)Overall quality costs increasing as a percentage of sales with external failure costs decreasing and prevention costs increasing.
• D)Overall quality costs remaining the same as a percentage of sales with prevention and appraisal costs increasing over time.

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Definitions:

Fixed Costs

Rent, salaries, and insurance are examples of expenses unaffected by changes in production or sales levels.

Variable Costs

Expenditures that fluctuate in accordance with the amount of products made or sold.

Inventoriable Costs

Expenses directly connected to the production of goods that are initially recorded as inventory and expensed as cost of goods sold when the goods are sold.

Manufacturing Overheads

All indirect costs associated with the production process, including utilities, maintenance, and factory management salaries.