CPIM Practice Exam

What do prevention costs focus on?

1. Increasing production speed

2. Reducing failure and appraisal costs

3. Improving employee morale

4. Enhancing customer service

The correct answer is: Reducing failure and appraisal costs

The focus of prevention costs is on reducing failure and appraisal costs. Prevention costs are incurred to ensure that a product or service meets quality standards and to minimize defects or failures in the production process. By investing in activities such as quality training, process control, and equipment maintenance, organizations aim to prevent defects that could result in rework, scrap, or poor quality, which would increase failure and appraisal costs. This proactive approach not only helps in improving the overall quality of products or services but also indirectly saves the organization money by reducing the costs associated with identifying and correcting defects after they occur, thus achieving more efficient operations and higher customer satisfaction in the long run.