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Prevention cost

Prevention costs are incurred to avoid quality failures before they occur. Examples include process design, supplier assurance, training and maintenance directed at preventing defects. They should be considered with appraisal and failure costs over a suitable period. A larger prevention budget can create value by reducing rework and customer failures, but the expected benefit should be evidenced rather than assumed. Classify costs by purpose, not merely by the department spending them.

Worked example

Training costing $8,000 reduces recurring scrap by an estimated $15,000 annually while maintaining output quality, subject to verifying the causal effect.

Common mistake

A rise in prevention spending is not automatically poor performance, and not every training expense is a quality-prevention cost.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA APM Direct September 2026–June 2027