In a Cost-Of-Quality (COQ) Reporting Framework, Costs Incurred in Conjunction

question 52

Multiple Choice

In a Cost-of-Quality (COQ) reporting framework, costs incurred in conjunction with the measurement and analysis of data to ascertain conformity of products and services to specification are properly classified as:

• A) External failure costs.
• B) Appraisal costs.
• C) Internal failure costs.
• D) Prevention costs.
• E) Value-added costs.

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Definitions:

Machine-hours

An indicator of the duration for which equipment is utilized in the manufacturing process, commonly employed for distributing manufacturing overhead costs.

Contribution Margin

The amount remaining from sales revenue after variable expenses are deducted, indicating the potential profitability of products.

Net Operating Income

A measure of a company's profitability from its core business operations, excluding non-operating income and expenses.

Variable Expense Ratio

A measurement that indicates the proportion of variable expenses to sales, showing how costs change with sales volume.