Which of the following would be classified as an external failure cost on a quality cost report?
A) Reentering data because of keying errors.
B) Customer returns arising from quality problems.
C) Test and inspection of in-process goods.
D) Rework labor and overhead.

Question

Quizplus · Accepted Answer

Customer returns arising from quality problems are considered external failure costs because they occur after the product has been delivered to the customer and are a result of quality issues with the product. Reentering data because of keying errors would be classified as a prevention cost. Test and inspection of in-process goods would be a part of appraisal costs. Rework labor and overhead would be considered an internal failure cost.

Which of the Following Would Be Classified as an External