1) The Farber Company recorded the following costs of quality during the current period:

Downtime $ 1,500

Inspection 1,000

Product design 4,000

Reliability testing upon completion of production 2,500

Restocking and packaging 1,500

Training 3,000

Warranty repairs and replacements 2,500

Total Costs of Quality $ 16,000

Which choice below represents the correct amount of prevention and appraisal costs?

Prevention Appraisal

A) $ 4,000 $ 1,000

B) $ 3,000 $ 1,000

C) $ 7,000 $ 3,500

D) $ 3,000 $ 2,500

Multiple Choice

Choice A

Choice B

Choice C

Choice D

2)Which of the following statements is incorrect?

Multiple Choice

A)An activity-based costing system uses more cause-and-effect relationships in tracing costs than does a traditional cost allocation system.

B)An activity-based costing system first assigns or traces costs to the departments in which products are made.

C)The hierarchical categories into which activities are grouped are unit-level, batch-level, product-level and facility-level activities.

D)The total amount of unit-level costs changes in proportion to the number of units of product made.

3)All of the following are external failure costs except:

Multiple Choice

A) warranty repairs and replacement.

B) reliability testing

C) customer relations.

D) restocking and packaging.