Harlose Suits faced a lot of complaints from customers when its recent batch of goods was dispatched. The employees at Harlose Suits, hence, had to rework on the returned items, and in some cases, the company had to even replace the faulty goods. In this case, the costs incurred by Harlose Suits are an example of _____.
A) prevention costs
B) appraisal costs
C) internal failure costs
D) external failure costs

Question

Quizplus · Accepted Answer

The costs incurred by Harlose Suits due to reworking on returned items and replacing faulty goods are examples of external failure costs. These costs arise when products fail to meet quality standards after they are delivered to the customer.

Harlose Suits Faced a Lot of Complaints from Customers When