Costs of quality incurred when a customer returns a defective product is known as:
A) Prevention costs
B) Appraisal costs
C) Internal failure costs
D) External failure costs
E) None of the above

Question

Quizplus · Accepted Answer

External failure costs are incurred when a defective product reaches the customer and they return it. This can result in costs such as refunds, replacements, and potential damage to the company's reputation. Prevention costs are incurred to prevent defects from occurring in the first place, appraisal costs are incurred to evaluate the level of quality, and internal failure costs are incurred when defects are caught before the product reaches the customer.

Costs of Quality Incurred When a Customer Returns a Defective