Chapter 27 - Answer - MANAGEMENT ACCOUNTING - Solutions...

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MANAGEMENT ACCOUNTING - Solutions Manual CHAPTER 27 MANAGING  ACCOUNTING IN  A CHANGING  ENVIRONMENT I. Questions 1. The American Heritage Dictionary defines quality as “1. a characteristic or attribute of something; property; a feature. 2. the natural or essential character of something. 3. excellence; superiority.” Quality for a product or service can be defined as a “product or service that conforms with a design which meets or exceeds the expectations of customers at a price they are willing to pay.” 2. Procter & Gamble defines TQM as “the unyielding and continually improving effort by everyone in an organization to understand, meet, and exceed the expectations of customers.” Typical characteristics of TQM include focusing on satisfying customers, striving for continuous improvement, and involving the entire workforce. TQM is a continual effort and never completes. Global competition, new technology, and ever-changing customer expectations make TQM a continual effort for a successful firm. 3. The core principles of TQM include (1) focusing on satisfying the customer, (2) striving for continuous improvement, and (3) involving the entire work force. 4. Continuous improvement (Kaizen) in total quality management is the belief that quality is not a destination; rather, it is a way of life and firms need to continuously strive for better products with lower costs. In today’s global competition, where firms are forever trying to outperform the competition and customers present ever-changing expectations, a firm can never reach the ideal quality standard and needs to continuously improve quality and reduce costs to remain competitive. 5. The Institute of Management Accountants (IMA) believes an effective implementation of total quality management will take between three and five years and involves the following tasks: Year 1 27-1
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Chapter 27 Managing Accounting in a Changing Environment Create a quality council and staff Conduct executive quality training programs Conduct quality audits Prepare gap analysis Develop strategic quality improvement plans Year 2 Conduct employee communication and training programs Establish quality teams Create measurement systems and set goals Year 3 Revise compensation / appraisal / recognition systems Launch external initiatives with suppliers Review and revise 6. Reward and recognition are the best means of reinforcing the emphasis on TQM. Moreover, proper reward and recognition structures can be very powerful stimuli to promote TQM. Efforts and progress will most likely be short-lived if no change is made to the compensation / appraisal / recognition systems to make them in line with the objectives of the firm’s TQM. 7.
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This note was uploaded on 07/18/2011 for the course ECON 102 taught by Professor Sadassad during the Spring '11 term at Abant İzzet Baysal University.

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Chapter 27 - Answer - MANAGEMENT ACCOUNTING - Solutions...

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