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Strategic Accounting - Assignment Example

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Strategic Accounting

Quality costing should therefore be understood as the cost of not producing a product, which bears the above components that gauge a quality product or service (Thompson, 2010). The aspect of quality cost arises from the third era of quality where it emerges as a tool of quality assurance with its main goal being to avoid problems, by giving room to coordination of activities. Quality control as a technique of management accounting has been improved over time through the contribution of various scholars, who added in more knowledge and insight to quality control. Crosby initiated the aspect of quality testing through inspection, quality management, quality assurance and improvement (Kilger, 2002). Deming on the other hand shared his contribution by introducing the aspect of companywide quality control, which was later revised by Juran through his total quality management technique (Nokes, 2000). Quality costs are mainly understood in four major groupings which are commonly referred to as the four types of quality costs. Prevention costs is a type of quality control and is considered as generally the most effective way to manage quality costs and avoid defects of products and services (Sadler, 2003). Prevention costs hold on a projection that it is better to prevent a defect from occurring at the first place than to correct it when it has already occurred, as it tends to be more expensive. Prevention costs make use of control activities such as statistical process control, quality engineering and training, which reduce defects. Prevention cost as a type of quality control also takes in activities relating to quality control, which consists of people who meet to discuss and solve quality problems. Statistical quality control as an activity of quality control is used to detect whether a specific product or service is in or out of quality (Samset, 2010). Prevention costs therefore take in the perspective of all activities that are designed to prevent the initial poor quality of products and services (Commission for local governance, 2000). Appraisal costs are also referred to as inspection costs and are incurred by an organization with the aim of identifying defective products in the production process, to make sure that defective products are not shipped to customers. Appraisal costs have the purpose of inspecting the production process and ensuring defective products are identified and eliminated. Many organizations however look at appraisal costs as expensive and ineffective to customers (Cadez, 2008). Other than employing appraisal costs, many companies encourage customers to be increasingly responsible for their own quality control through designing products that allow simple manufacturing, which gives a chance for quality to be built into the products (Morden, 2012). Internal failure costs on the other hand refer to cots incurred internally when a particular product fails to conform to design specifications that had been identified initially. Internal failure ...Show more

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Strategic Accounting Name: Instructor: Course: Date: PART A Introduction Quality costs simply refer to the costs associated with preventing, looking for and identifying defects associated with products and services offered by a particular organization. Understanding of quality costs begins with a reviewal and treatment of quality from a customer’s point of view (Cole, 2003)…
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