Study Notes management accounting acca f2

 
These costs arise from inadequate quality where the problem is discovered 
before the transfer of ownership from supplier to buyers.
 
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Rework costs 
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Down time or idle time due to quality problem 
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Disposal of defective products 
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Re-inspection cost 
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Cost of reviewing product after failure 
2. 
External failure costs:
 
The cost arising from poor quality discovered after the transfer of ownership 
from suppliers to buyers.
 
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Warranty claims 
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Cost of lost sales 
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Cost of customer service section
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Complaint, investigation and processing costs 
3. 
Appraisal costs:
 
It is a cost incurred in initial ascertaining the product to quality requirement 
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Inspection and tests 
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Product quality audits 
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Process control monitoring 
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Test equipment expense 
4. 
Prevention costs:
 
Cost of any action taken to prevent or reduce defects of failures
 
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Customer surveys 
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research of customer needs 
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quality education and training programs 
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supplier reviews 
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investment in improved production equipment 
✓
LIFE
 
CYCLE
 
COSTING 
It tracks and accumulates costs and revenues attributable to each product over the entire product life 
cycle. A product life cycle can be divided into four phases: