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Alternative costing principles

Total Quality Management (TQM)

5.1 What is TQM?

The key impacts of TQM are often that problems are avoided rather than solved, and
inventory levels can be greatly reduced. This is achieved through the application of
three principles:

 'get it right, first time'

 continuous improvement

 customer focus.

5.2 Contrast to traditional costing

 TQM expects continuous improvement rather than standard performance.

 TQM expects everyone to take responsibility for failures in the system.

 TQM systems do not accept waste as being acceptable.

 TQM is concerned with quality related costs rather than production costs.

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