"Companies should focus on financial measures of quality because these are the only measures of
quality that can be linked to bottom-line performance." Do you agree? Explain.
A. Yes, companies should emphasize financial measures of quality. Total COQ provides a
measure of quality performance for evaluating trade-offs among prevention costs,
appraisal costs, internal failure costs, and external failure costs.
B. Yes, companies should emphasize financial measures of quality. Financial measures of
quality are consistent with the attention-directing role of management accounting. COQ
measures focus managers' attention on the costs of poor quality.
C. No, companies should emphasize nonfinancial measures of quality over financial measures.
Without nonfinancial quality measures, quality problems might not be identified until it is too
late.
D. No, companies should emphasize financial as well as nonfinancial measures of quality,
such as customer satisfaction, employee satisfaction and defect rates. Nonfinancial
measures are easier for employees to understand; they direct attention to physical
processes that help managers identify precise problem areas in need of improvement,
which can be linked to bottom-line performance.