From: Alice CooperThe firm that we work for is a producer of tangible products that then sells their products to a consuming populace that is unaffected by place, income, sex, race, age, or environmental concerns. The products are used by various consumers and it is our job to ensure we are providing the highest quality of products to our consumers. Keep in mind, providing the highest quality to our consumers ensures that we will have a positive reputation and receive repeat business as well as possible referrals for our products by word of mouth. There are three types of costs when quality consideration is made; Prevention costs, Appraisal/Inspection costs, and Internal/External costs.
Prevention costs are costs that are incurred in effort to minimize appraisal and failure costs. It is always better to prevent defects in the product rather than finding the defects in the products after the product has been made and then having to remove them. An example of this would be to provide up to date training for staff to ensure that the products are produced properly the first time (Accounting for management, 2014).
Appraisal/Inspection costs are costs that are incurred in assessing that products/services conform to the requirements. It has to do with testing, executing, and the examination to assess whether specified quality is being maintained and to identify defective products before they are shipped to the consumer. An example of this would be to ensure that you maintain a team of inspectors to go through the products thoroughly before they are shipped to the consumer (Accounting for management, 2014).
Internal failure costs are the costs incurred from removing the defects from the products before shipping. Example of this would simply be the money it would cost to change or reconstruct a product that had a defect. External failure costs are costs that occur after the product is shipped is shipped to the consumer. An example of
Cited: Accounting for management. Costs of quality or quality costs. 2014. http://www.accountingformanagement.org/costs-of-quality-or-quality-costs/