MANAGERIAL ACCOUNTING – 12th Edition

CH 2 TERMS

Appraisal costs– Cost that are occurred to identify defective products before the products are shipped to customers.

External failure costs – Costs that are incurred when a product or a service that is defective is delivered to a customer.

Internal failure costs – Costs that are incurred as a result of identifying defective products before they are shipped to customers.

ISO 9000 standards – Quality control requirements inquired by the Internal Organization for Standardization that relate to products sold in European countries.

Prevention costs – Costs that are incurred to keep defects from occurring.

Quality circles – Small groups of employees that meet on a regular basis to discuss ways of improving quality.

Quality cost – Costs that are incurred to prevent defective products from falling into the hands of customers or that are incurred as a result of defective units.

Quality cost report – A report that details prevention costs, appraisal costs, and the costs of internal and external failures.

Quality of confirmation – The degree to which a product of service meets or exceeds its design specifications and is free of defects or other problems that mar its appearance or degrade its performance.

Statistical process control –A charting technique used to monitor the quality of work being done in a workstation for the purpose of immediately correcting any problems.