The accountant can then classify these costs into the four previously identified categories of prevention, appraisal, internal failure, and external failure. Further, the accountant can calculate companywide costs of quality by summing quality costs for all departments. With quality costs classified by type for each department and for the company as a whole, these costs can be estimated and incorporated into departmental and company budgets. Budgets can then serve as a yardstick against which actual spending can be compared, variances calculated and investigated, and corrective action taken. Additionally, to improve quality, a company needs to be able to identify and eliminate quality problems.
Several tools are available.
Among them are statistical control charts, Pareto analysis, and fish bone diagrams. Control charts are used to distinguish between random and nonrandom variations. The latter fall outside the acceptable range of variability and are usually investigated. Pareto analysis shows the frequency with which each defect occurs. Fish bone diagrams are used to identify the root causes of quality failures.