Advanced: Feedback control theory and product quality measurement

(a) In control theory, a ‘feedback control’ mechanism is one which supplies information to determine whether corrective action should be taken to re-establish control of a system.

You are required to:

(i) illustrate by means of a diagram how the feedback mechanism operates within a control system, adding a commentary describing how the system functions;

(9 marks)

(ii) distinguish ‘feedforward’ from ‘feed¬

back’ control, giving two examples of each from within management account¬ ing. (4 marks)

(b) Achievement of a high standard of product quality has become a major issue in modem manufacturing industry.

In support of programmes aimed at achiev¬ ing acceptable quality standards, some companies have introduced detailed ‘quality cost’ measurement schemes.

In others, the philosophy has been that no measurement procedures should be devoted especially to the measurement of quality costs: quality cost schemes designed to measure performance in this area are consid¬ ered to add to administrative burdens; in reality ‘quality’ should be the expected achievement of the required product specifi¬ cation.

(i) set out a classification of quality costs which would be useful for reporting purposes. Give examples of actual costs which would be represented in each classification; (7 marks)

(ii) discuss the reality of the differences of philosophy expressed in the opening statement. Do they represent fundamen¬ tal differences or may they be reconciled? (5 marks)

(Total 25 marks) CIMA Stage 4 Management Accounting -

Control and Audit