The Four Accepted Categories of a Cost of Quality (COQ)

question 108

Essay

The four accepted categories of a Cost of Quality (COQ) Report are: prevention, appraisal, internal failure, and external failure. Assume your cost management instructor has given you an assignment related to COQ. You are to relate each of the cost categories above to the preparation of a class project, which is a study of an actual firm's cost management system. The typical student spends 16 hours researching an identified firm, five hours writing the report, and three hours in revising and presenting the report to the class.
Required:
1. Give an example of prevention, appraisal, internal failure, and external failure costs you might encounter in writing and presenting your report. (Example: "Draw up a time budget with necessary deadlines before starting the report" is an example of a prevention cost.)
2. Which of the four category examples you gave for Requirement (1) above has the greatest cost? What has the least cost? What has the greatest benefit? What has the least benefit? (Example: "Not saving word processing on a hard drive or jump drive" is an example of greatest cost in terms of time.)

Recognize the role and importance of the budget committee in the budgeting process.

Understand the concept of maintaining a minimum cash balance and its impact on financing decisions.

Understand the differences between Keynesian and classical economic theories.

Recognize the concept of equilibrium GDP and its relation to full employment according to Keynes and the classicals.

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Definitions:

Ego

In psychoanalytic theory, the part of the personality that balances the demands of the id, superego, and reality.

Id

A component of Freud's model of the psyche that is responsible for instinctual drives and operates based on the pleasure principle.

Aggressive Desires

Internal urges or tendencies towards hostility, confrontation, or exerting dominance over others or situations.

Pleasure Principle

In psychoanalytic theory, the driving force of the id that seeks immediate gratification of all desires, wants, and needs.