Help required in understanding soim Finamcial Performance topics

geek84 Registered Posts: 568 Epic contributor 🐘
Hi Folks

I'm on level 4 - trying to study Financial Performance. I'm having difficulty in remembering the different costs of quality such as: Prevention, Appraisal, Internal Failure, and External Failure Costs. Would someone be kind enough to provide any hints/tips as to the best way of remembering these and how to apply it to an exam question?



  • OlympicRudi
    OlympicRudi Registered Posts: 55 Regular contributor ⭐
    I didn't even learn those & passed easily, so they can't be that important. I'm guessing they're something to do with the essay questions, which I just used common sense to answer. Most questions do their best to make it really clear what answers they want from you, so don't panic & you'll be fine.
  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034 mod
    Imagine a washing machine manufacturer

    1.Prevention costs are the costs of preventing failure. The washing machine manufacturer is likely to spend money training staff to use the equipment correctly and produce good washing machines.

    2.Appraisal costs are the costs of checking for corect production. The washing machine manufacturer is likely to spend money inspecting and testing some of the washing machines coming from production as a way of checking that the products are up to the standard needed.

    3.Internal failure costs are the repair costs within the factory. The washing machine company is likely to send washing machines which do not meet the standards needed for sale back into the production department to be re-worked for example if the door hinges are in the wrong place, the inspectors would identify this and the door would be removed and re-fitted to bring the whole machine up to standard.

    4.External failure costs are repair costs incurred after thewashing machine has left the factory. If a customer finds that a washing machine purchased and fitted does not work, the washing machine manufacturing company will send an engineer to the customer to repair it on site.
  • geek84
    geek84 Registered Posts: 568 Epic contributor 🐘
    Many thanks to you both.
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