ABSTRACT
While the company acknowledges the general usefulness of quality-related costs in everyday decision making, it had at the time a deeper purpose in establish ing a rigorous system for collecting and presenting costs. It also had a consider able obstacle to overcome to reach its ultimate objectives. The company manufactures for a rapidly expanding market and the parent company intended to expand the manufacturing facilities at some of its sites. Thus the she manufactur ing divisions are in competition with each other for a large capital investment Company 2 is confident that its quality record is superior to that of its group com petitors and wishes to devise a rigorous system of cost definition, collection and presentation to be adopted by all the manufacturing divisions so that its superiority shows. The obstacle to this objective is that the headquarters manufacturing division uses a different cost system to the other competing divisions. The head quarters division uses a project costing system while the others all use standard costing systems. A further objective was to try to use costs to indicate how, where and when to invest in prevention.
