In a Cost-of-Quality (COQ) reporting framework, the cost of scrap, rework, and tooling changes are categorized as a(n):
A) External failure cost.
B) Internal failure cost.
C) Manufacturing overhead cost.
D) Avoidable cost.
E) Appraisal cost.

Question

Quizplus · Accepted Answer

Scrap, rework, and tooling changes are considered internal failure costs, as they occur as a result of defects or errors within the organization's processes. The goal of COQ reporting is to identify and reduce these costs, as they represent waste and inefficiency within the organization. External failure costs are associated with defects that are not caught internally and are incurred by the customer, while manufacturing overhead costs are related to the general costs of running the production process. Appraisal costs are related to quality control activities, such as inspection and testing, and avoidable costs are those that could have been avoided with better processes or decision-making.

In a Cost-Of-Quality (COQ) Reporting Framework, the Cost of Scrap