Describe and prepare three different types of quality performance reports.
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The interim report is used to evaluate the firm's ability to meet its budgeted quality costs. Managers use the report to compare the actual quality costs with those that were targeted for the period.
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The multiple-period trend report is a trend graph for several years. The graph allows managers to assess the direction and magnitude of change since the inception of a total quality program.
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The long-range report compares actual costs with ideal or zero-defect level.
5. Discuss how environmental costs can be measured, reported, and reduced.
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Environmental costs are those costs incurred because poor environmental quality exists or may exist.
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There are four categories of environmental costs: prevention, detection, internal failure, and external failure.
• The external failure category is divided into realized and unrealized costs. Realized costs are those external costs the firm has to pay; unrealized or societal costs are those costs ", caused by the firm but paid for by society.
~'An environmental cost report is prepared by listing costs for each item within the four environmental cost categories.
6. Show how environmental costs can be assigned to products and processes.
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Managers must decide whether they will assign only private costs or whether they want all costs to be assigned (full costing).
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ABC assigns costs to environmental activities and then calculates activity rates.
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ABC rates are then used to assign environmental costs to products.
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By assigning environmental cost to products, management can classify products according to their degree of "dirtiness.