Internal failure costs refer to costs incurred:
A) in determining whether defects exist.
B) because defective products or services are delivered to customers.
C) in determining customer demand.
D) when defective products or services are detected before leaving the business.

Question

Quizplus · Accepted Answer

Internal failure costs are costs incurred when defective products or services are detected before leaving the business. These costs include the costs of scrap, rework, and materials that have to be thrown out due to defects. They may also include the cost of downtime, machine repairs, and inspection costs incurred in the process of detecting and correcting the defect.

Internal Failure Costs Refer to Costs Incurred