Understanding Activity Based Costing and its Relation to Cost of Quality Management

The video tutorial discusses the application of activity-based costing (ABC) in quality management. It explains how costs are allocated to specific activities, particularly focusing on the cost of quality, which includes appraisal, prevention, and failure costs. The tutorial highlights challenges in tracing indirect costs and suggests using ABC to better allocate these costs. It outlines steps for implementing ABC, such as dividing activities into pools and using metrics for cost assignment.

What is activity-based costing and how does it relate to the allocation of costs?

What are the general activities that contribute to the cost of quality?

What challenges are associated with tracing quality costs to specific sources?

Describe the steps involved in applying the activity-based costing approach to cost of quality.

Why is individual job sampling considered a best practice in cost of quality management?