Costs incurred because products or services fail to meet requirements after delivery to customers are called
A)external failure costs.
B)internal failure costs.
C)appraisal costs.
D)prevention costs.

Question

Quizplus · Accepted Answer

External failure costs are costs incurred after the product or service has been delivered to the customer and they do not meet the requirements, resulting in customer complaints, returns, repairs, replacements, or legal claims. These costs include lost sales, warranty claims, repair costs, and damage to the company's reputation. Internal failure costs are costs incurred before the product or service is delivered to the customer but fails to meet the requirements during production or inspection. Appraisal costs are the costs associated with evaluating, testing, and inspecting products or services to ensure they meet the requirements. Prevention costs are the costs incurred to prevent defects or errors from occurring in the first place, such as training, quality improvement programs, and process improvement initiatives.

Costs Incurred Because Products or Services Fail to Meet Requirements