From the above schedule of activity costs, determine the external failure costs.
A) $39,000
B) $19,000
C) $12,000
D) $31,000

Question

From the above schedule of activity costs, determine the external failure costs.
A) $39,000 
B) $19,000 
C) $12,000 
D) $31,000

Quizplus · Accepted Answer

External failure costs include the costs that arise when products or services fail after delivery to customers. From the given schedule, the external failure costs are the costs associated with the "Returned material" and "Warranty claims" activities, which are $16,000 and $15,000, respectively. Therefore, the total external failure costs are $16,000 + $15,000 = $31,000, which is option D.

From the Above Schedule of Activity Costs, Determine the External