When a manufacturer incurs costs to determine whether defects exist in their products, these costs are known as:
A) internal failure costs.
B) external failure costs.
C) appraisal costs.
D) prevention costs.

Question

Quizplus · Accepted Answer

The costs incurred to determine whether defects exist in products are known as appraisal costs. These costs include activities such as inspections, testing, and quality audits. Internal failure costs refer to the costs incurred to correct defects before they are shipped to customers, while external failure costs refer to the costs incurred when defects are discovered by customers. Prevention costs are costs incurred to reduce the likelihood of defects occurring in the first place.

When a Manufacturer Incurs Costs to Determine Whether Defects Exist