What is the difference between observable and hidden quality costs? Explain and give at least one example of each.
What will be an ideal response?
While student examples may vary, here is an example answer.
Observable quality costs can be measured and reported, often on the basis of information in the accounting records. For example, the cost of inspectors' salaries is an observable quality cost.
Hidden quality costs cannot easily be measured, reported, or even estimated. For example, the opportunity cost associated with lost sales after a defective product is sold is a hidden quality cost to the company.
You might also like to view...
An interest-beating note is a loan in which the lender deducts interest from the amount loaned before the money isadvanced to the borrower
a. True b. False Indicate whether the statement is true or false
The AP/CD process handles the repetitive work routines of:
a. cashier b. purchasing c. Receiving d. all of the above
All of the following are ways one corporation could affect the operating and financial policies of another corporation except
A) analysis of data regarding profitability. B) material transactions between the companies. C) representation on the board of directors. D) exchange of managerial personnel.
The three categories of manufacturing costs comprising the cost of work in process are direct labor, direct materials, and:
A) indirect expenses B) direct expenses C) sales salaries expense D) factory overhead