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Hi Ken,
I am overcomplicating this and would really appreciate your thoughts please.
I am revising quality costs (using June 2019 Q1iii which is here for your reference https://www.acowtancy.com/exams/acca-apm/paper-question/jun-2019-genuine-q1iii)
I am finding chatgpt slightly unreliable as its given me back some blatantly incorrect answers, so would appreciate a human response.
I am getting my wires crossed between Prevention costs and Appraisal costs.
I know prevention costs is basically preventing issues from arising in the first place, appraisal is more of the checking process.
When putting my answer together I had touched on the following:
Prevention cost – starts at the design stages – Folt should ensure there is a clear design spec – to enforce this it must ensure there are clear quality SLAs shared with the manufacturer – the manufacturer is responsible for meeting these SLAs – must ensure staff are trained to meet these quality standards…
Appraisal cost – Folt can arrange audits to ensure processes are being followed in line with the SLAs – the manufacturer is responsible for ensuring processes are being followed by staff – overall responsibility here lies with the manufacturer.
As you can see from my notes above, I feel i’m almost making very similar points and there is overlap. I am a little confused, I am guessing SLA discussions should be focused around appraisal costs rather than prevention costs.
Are you able to share some top tips to bare in mind to help me avoid the cross-over please or provide some perspective on my notes?
Thank you!
Prevention cost as you set out above is fine, but perhaps add staff training and indeed staff morale so that a pride is taken in the work.
Just think of appraisal cost as the cost of checking and testing materials, performance and the work done. Use the word ‘audit’ if you want to (eg auditors check accounts). Without that you wouldn’t know if the prevention measures are working effectively.
Appraisal will certainly look at output (eg testing 1% of production) but it can also appraise the effectiveness of the prevention techniques. So, if under prevention you have specified that raw materials supplied have to have a certain purity, appraisal might show the quality is below specification. You would then have to revisit the prevention stage and for example, change supplier to a more reliable one.
HTH
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