Improving the definition and quantification of quality costs
By: YANG, Ching-Chow
.
Material type: 
ArticlePublisher: Oxfordshire, UK : Taylor & Francis, March-April 2008Total quality management & business excellence 19, 3-4, p. 175-191Abstract: A difficulty facing companies today is the inadequacy of most cost-accounting systems in addressing quality costs and in supplying appropriate data in a suitable format that considers total cost. The main reason for this inadequacy is a lack of adequate methods for determining the financial consequences of poor quality associated with various quality activities. The present study addresses these needs by first refining the traditional 'Prevention-Appraisal-Failure' (PAF) categories of quality costs and hidden costs through the definition and addition of two new categories: 'extra resultant cost' and 'estimated hidden cost'. Using this new categorization, the study then provides a detailed classification of the items of quality costs in terms of an expanded list of quality activities along the product life-cycle. The study then demonstrates the calculation of several kinds of total costs using different formats of a 'cost of quality account matrix', including a calculation of the sharing of responsibility for these costs among relevant departments
A difficulty facing companies today is the inadequacy of most cost-accounting systems in addressing quality costs and in supplying appropriate data in a suitable format that considers total cost. The main reason for this inadequacy is a lack of adequate methods for determining the financial consequences of poor quality associated with various quality activities. The present study addresses these needs by first refining the traditional 'Prevention-Appraisal-Failure' (PAF) categories of quality costs and hidden costs through the definition and addition of two new categories: 'extra resultant cost' and 'estimated hidden cost'. Using this new categorization, the study then provides a detailed classification of the items of quality costs in terms of an expanded list of quality activities along the product life-cycle. The study then demonstrates the calculation of several kinds of total costs using different formats of a 'cost of quality account matrix', including a calculation of the sharing of responsibility for these costs among relevant departments
Click on an image to view it in the image viewer
There are no comments for this item.