What are prevention costs?
Understand the Problem
The question is asking for an explanation of what prevention costs are, which refers to the expenses incurred to prevent defects or issues in products or services within a business context.
Answer
Costs to prevent defective units.
The final answer is costs to prevent the production of defective units such as inspection costs, preventive maintenance, and redesign of products.
Answer for screen readers
The final answer is costs to prevent the production of defective units such as inspection costs, preventive maintenance, and redesign of products.
More Information
Prevention costs are part of the cost of quality (CoQ) and are incurred to avoid defective products and services. They ensure that quality issues do not occur in the production process.
Tips
A common mistake is confusing prevention costs with appraisal costs. Remember, prevention costs aim to avoid defects, while appraisal costs aim to detect defects.
Sources
- Prevention Cost- What Is It, Examples, Benefits, Vs Appraisal Cost - wallstreetmojo.com
- Preventive costs definition - AccountingTools - accountingtools.com
- What Is a Prevention Cost? (With Importance and Types) | Indeed.com - indeed.com
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