costacctg13_sm_ch19 - CHAPTER 19 BALANCED SCORECARD QUALITY TIME AND THE THEORY OF CONSTRAINTS 19-1 Quality costs(including the opportunity cost of lost

costacctg13_sm_ch19 - CHAPTER 19 BALANCED SCORECARD QUALITY...

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19- CHAPTER CHAPTER 19 19 BALANCED SCORECARD: QUALITY, TIME, AND THE THEORY OF CONSTRAINTS CONSTRAINTS 19-1 Quality costs (including the opportunity cost of lost sales because of poor quality) can be as much as 10% to 20% of sales revenues of many organizations. Quality-improvement programs can result in substantial cost savings and higher revenues and market share from increased customer satisfaction. 19-2 Quality of design refers to how closely the characteristics of a product or service meet the needs and wants of customers. Conformance quality refers to the performance of a product or service relative to its design and product specifications. 19-3 Exhibit 19-1 of the text lists the following six line items in the prevention costs category:designengineering;processengineering;supplierevaluations;preventiveequipmentmaintenance; quality training; and testing of new materials.19-4 19-5Three methods that companies use to identify quality problems are: (a) a control chart 19-6 19-7Examples of nonfinancial measures of customer satisfaction relating to quality includethe following:
19- 19-8 19-8 Examples of nonfinancial measures of internal-business-process quality: 1. the percentage of defects for each product line; 2. process yield (rates of good output to total output at a particular process; 3. manufacturing lead time (the amount of time from when an order is received by production

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