A Common Principle Underlying Various Total Quality Management (TQM) Programs

question 34

Multiple Choice

A common principle underlying various total quality management (TQM) programs is that one should:

• A)trace defective items back to the individual responsible.
• B)maintain a strong distinction between labor and management.
• C)listen and learn from competitors.
• D)not learn from customers.
• E)do it right the first time to eliminate costly rework.

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Definitions:

Predetermined Overhead Rate

A calculated estimate used for allocating overhead costs to products or services, based on an established measure such as labor hours or machine usage, facilitating budgeting and financial planning.

Activity-Based Costing

A strategy for attributing overhead and indirect expenditures to associated services and products, determined by the activities demanded by each.

Estimated Overhead Cost

An approximation of the indirect costs associated with production, used for budgeting and pricing purposes.

Activity Cost Pools

Activity Cost Pools are aggregations of all the costs associated with particular activities used in activity-based costing to allocate overhead costs more accurately.