Chapter 17 Key Terms

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Cost Accounting Chapter 17 Key Terms
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Appraisal Cost a quality control cost incurred for monitoring or inspection; compensates for mistakes not eliminated through prevention activities
Benchmarking the process of investigating how other do something well so that the investigating company can imitate, and possibly improve upon, the benchmarked company's techniques
Control Chart a graphical presentation of the results of a specified activity; indicates the upper and lower control limits and those results that are out of control
Cost of Compliance the sum of prevention and appraisal costs
Cost of Noncompliance the cost of production imperfections; equals the sum of internal and external failure costs
External Failure Cost any expenditure for items such as warranty work, customer complaints, litigation, and defective product recalls incurred after a faulty unit of product has been shipped to the customer or an inadequate service has been performed for a customer
Grade (of a product or service) the assessment of product characteristics as to that product's ability to satisfy certain identified customer needs, especially price
Internal Benchmarking a comparative technique that focuses on how and why one organizational unit is performing better than another
Internal Failure Cost an expenditure, such as scrap and rework, incurred on defective units before those units are shipped to the customer; an expenditure incurred for defective service before that service is accepted by the customer
ISO 9000 Series a comprehensive series of international quality standards that define the various design, material procurement, production, quality control, and delivery requirements and procedures necessary to produce quality products and services; the series of three compliance standards (ISO 9001, 9002, and 9003) and two guidance standards (ISO 9000 and 9004) were integrated into ISO 9001:2000
Pareto Analysis is a statistical technique based on the Pareto principle that can be used to separate the "vital few" from the "trivial many."
Prevention Cost A cost incurred to improve quality by preventing defects from occurring
Process Benchmarking A comparative technique that focuses on practices and how the best-in-class companies achieved their results
Quality The condition of having all the characteristics of a product or service to meet the stated or implied needs of the buyer; relates to both performance and value; the pride of workmanship; conformity to requirements.
Quality Audit A review of product design activities (although not for individual product), manufacturing processes and controls, quality documentation and records, and management philosophy
Quality Control (QC) The implementation of all practices and policies designed to eliminate poor quality and variability in the production or service process; places the primary responsibility for quality at the source of the product of service
Results Benchmarking A comparative technique in which an end product or service is examined; the focus is on product/ service specifications and performance results
Reverse Engineering An end product or software program is examined using a process called reverse engineering
Six Sigma A high-performance, data-driven approach to analyzing and solving the root causes of business problems; allows no more than 3.4 defects per million "opportunities"
Statistical Process Control (SPC) The use of control techniques that are based on the theory that a process has natural variations in it over time, but uncommon variations are typically the points at which the process produces "errors," which can be defective goods or poor services
Strategic Benchmarking A comparative technique that is non-industry specific and focuses on how companies compete, seeking to identify the winning strategies that have enabled high-performing companies to be successful in their marketplaces.
Total Quality Management (TQM) A structural system for creating organization-wide participation in planning and implementing a continuous improvement process that exceeds the expectations of the customer/client; the application of quality principles to all company endeavors; is also know as total quality control.
Value The characteristic of meeting the highest number of customer needs at the lowest possible price.
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