Quality costs are all the costs that a manufacturer incurs to ensure it produces a quality product.

1. Quality
Costing
Presented By: Kakoli Bhakat(29)

2. Quality
Costing
Quality costs are the all the costs that
a manufacturer incurs to ensure it
produces a quality product.

3. Prevention costs
01 Appraisal cost
02
Internal failure costs External failure cost
Categories/ types of
quality costing
03 04

4. Prevention cost
• The prevention costs can be regarded as the costs
that the business incurs to reduce and minimize
defects.
• The prevention costs are determined at the start of
every new process step.
01.

5. Appraisal
cost
• The appraisal cost can be regarded
as the costs that the business incurs
when it works towards the
identification of defective items.
• It is done before any product has to
be shipped to the end consumer.
02.

6. Internal
failure
costs
Internal failure costs are termed
as the cost that the business or
corporate entity has to bear
once the defective items are
identified before proceeding
with the shipment.
03.

7. External
failure cost
The external failure costs are costs that the
business has to bear on account of
defective items that are shipped to the
customers.
04

8. How to
calculate?
Cost of quality = CoGQ + CoPQ
OR
Cost of Quality = P C + A C + IFC + EFC

9. importanc
e
It is an essential methodology as it allows the
business to derive a competitive edge with respect
to its peers working in the industry. These costs
ensure that problems and root causes that can
impact the business be identified at a very early
stage, and preventive actions could be undertaken
over them.

10. benefits
It allows the organization to plan for costs that the business has to
incur in maintaining quality costs and helps the organization to make
provisions over them, which in turn helps the organization to maintain
a favorable bottom line.

11. THANK
YOU