CIA-III Exam dumps PDF | Exam-Dumps (Page: 33)

QUESTION: 161 Exam Topic: 1, Volume A

Listed below are selected line items from the cost-of-quality report for Company B for
What is Company B's total prevention and appraisal cost for last month?

US $786
US $1,154
US $1,940
US $2,665

Answer(s): C

Explanation:

The costs of prevention and appraisal are conformance costs that serve as financial measures of internal performance. Prevention costs are incurred to prevent defective output. These costs include preventive maintenance, employee training, review of equipment design, and evaluation of suppliers. Appraisal costs are incurred to detect nonconforming output. They embrace such activities as statistical quality control programs, inspection, and testing. The equipment maintenance cost of US $1,154 is a prevention cost. The product testing cost of US $786 is an appraisal cost. Their sum is US $1,940.

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QUESTION: 162 Exam Topic: 1, Volume A

All of the following are generally included in a cost-of-quality report except:

Warranty claims.
Design engineering.
Supplier evaluations.
Lost contribution margin.

Answer(s): D

Explanation:

A cost-of-quality report includes most costs related to quality, including the costs of external failure, internal failure, prevention, and appraisal. Lost contribution margins from poor product quality are external failure costs that normally do not appear on a cost-of-quality report because they are opportunity costs. Opportunity costs are not usually recorded by the accounting system, thereby understating the costs of poor quality. Lost contribution margins from reduced sales, market share, and sales prices are external failure costs that are also not usually included in a cost-of-quality report.

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QUESTION: 163 Exam Topic: 1, Volume A

Conformance is how well a product and its components meet applicable standards.
According to the robust quality concept,

A certain percentage of defective units is acceptable.
Units are acceptable if their characteristics lie within an acceptable range of values.
The goal is for all units to be within specifications.
Every unit should reach a target value.

Answer(s): D

Explanation:

Conformance is how well a product and its components meet applicable standards. The traditional view is that conforming products are those with characteristics that lie within an acceptable specified range of values that includes a target value. This view also regarded a certain percentage of defective nonconforming) units as acceptable. The traditional view was superseded by the zero-defects approach that sought to eliminate all nonconforming output.
An extension of this approach is the robust quality concept. Its goal is to reach the target value in every case. The reason is that hidden quality costs occur when output varies from the target even though the units are within specifications.

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QUESTION: 164 Exam Topic: 1, Volume A

The Plan-Do-Check-Act PDC}A) cycle is a quality tool devised by\ALE. Denning. How is
PDC A best described

A "management by fact" approach to continuous improvement.
An ongoing evaluation of the practices of best-in-class organizations.
The translation of customer requirements into design requirements.
The responsibility of every employee, work group, department, or supplier to inspect the work.

Answer(s): A

Explanation:

PDC is a "management by fact" or scientific method approach to continuous improvement. PDC A creates a process-centered environment because it involves studying the current process, collecting and analyzing data to identify causes of problems, planning for improvement, and deciding how to measure improvement Plan). The plan is then implemented on a small scale if possible Do). The next step is to determine what happened Check). If the experiment was successful, the plan is fully implemented Act). Tin cycle is then repeated using what was learned from the preceding cycle.

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QUESTION: 165 Exam Topic: 1, Volume A

Which of the following quality costs are nonconformance costs?

Systems development costs.
Costs of inspecting in-process items.
Environmental costs.
Costs of quality circles.

Answer(s): C

Explanation:

Nonconformance costs include internal and external failure costs. External failure costs include environmental costs, e.g., fines for violations of environmental laves and loss of customer goodwill.

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Financial CIA-III Exam (page: 33) Financial The Certified Internal Auditor Part 3 Updated on: 16-Feb-2026

QUESTION: 161 Exam Topic: 1, Volume A

Explanation:

QUESTION: 162 Exam Topic: 1, Volume A

Explanation:

QUESTION: 163 Exam Topic: 1, Volume A

Explanation:

QUESTION: 164 Exam Topic: 1, Volume A

Explanation:

QUESTION: 165 Exam Topic: 1, Volume A

Explanation:

Financial CIA-III Exam (page: 33)
Financial The Certified Internal Auditor Part 3
Updated on: 16-Feb-2026