Appraisal cost
Appraisal costs are costs of evaluating whether materials, products, processes or services meet required quality standards. Inspection, testing and quality audits can fall in this category. They detect problems rather than necessarily prevent the underlying cause. Distinguish this quality-management meaning from employee performance appraisal. More checking can be appropriate where risk is high, but process improvement may reduce the need for repeated inspection if reliability is demonstrated.
Worked example
Incoming-material testing costs $5,000 and final-product inspection $7,000, giving $12,000 appraisal cost for the period on this scope.
Common mistake
Do not define appraisal costs as the expense of annual staff performance reviews; that is a different meaning of appraisal.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | APM | Direct | September 2026–June 2027 |
