What is a prevention cost How can it be recognized Describe

What is a prevention cost? How can it be recognized? Describe where

prevention costs can be found.

Solution

Prevention cost is a cost incurred towards the quality control efforts. These efforts helps in preventing the manufacture of defective products and hence are called prevention costs. Prevention costs are found in manufacturing as well as services company in the following methods or strategies - (i) statistical process control - this is a method of quality control using statistical methods. Expenses are incurred towards monitoring and controling a process. (ii) quality engineering - expenses are incurred towards improving the quality of the production process (iii) staff training - expenses are incurred towards the training of employees towards quality orientation (iv) quality management tools - expenses are incurred towards implementation of tools like control charts, pareto charts, scatter diagrams, check sheets etc.