Internal failure cost occurs when:
A)A company repairs a product before it is sold to the customer.
B)A company repairs a product after it is sold to the customer.
C)A company hires someone to inspect material before production takes place.
D)A company pays an engineer to insure the production line is free of faulty machines.

Question

Quizplus · Accepted Answer

Internal failure costs are costs that are incurred when a product or service that does not meet quality standards is detected before the product is shipped to the customer. Repairing a product before it is sold to the customer is an example of internal failure cost as it represents the cost of correcting a mistake in the production process.

Internal Failure Cost Occurs When