Which term listed below describes costs incurred when the company fails to detect poor quality goods or services?
A)Internal failure costs
B)Value-added activity
C)Just-in-time production
D)External failure costs

Question

Quizplus · Accepted Answer

External failure costs refer to costs incurred when the company fails to detect poor quality goods or services, which include expenses related to warranties, repairs, product recalls, and lost customers. Internal failure costs, on the other hand, are incurred when poor quality is detected before the goods or services reach the customer, such as the cost of rework, scrap, or re-inspection. Value-added activity and just-in-time production are not directly related to the costs of poor quality.

Which Term Listed Below Describes Costs Incurred When the Company