Controlling the cost of product defects

Effective accounting information systems (AIS) will enhance decision making, motivate executives, and increase efficiency in the organization. The AIS used to report and control production spoilage or product defects usually will not achieve all of the three objectives which, consequently, produces conflict between the management personnel. Defective products or work and production spoilage indicates imperfections in labor, materials, or machines and work which can not meet either the satisfaction or the specifications of the customer. A quality defect-reporting system will meet the following objectives: record all defect-related costs; provide executives with enough data for decisions about the levels and reasons of the defects; motivate executives to take the responsibility and to prevent the defects; and allow for feedback for the evaluation of the department's performance and data for corrective action when needed.