Costs incurred when products and services fail to conform to requirements or satisfy customer needs after being delivered to customers are
A) prevention costs.
B) appraisal costs.
C) internal failure costs.
D) external failure costs.
E) a different category of quality-related costs.

Question

Quizplus · Accepted Answer

Costs incurred when products and services fail to conform to requirements or satisfy customer needs after being delivered to customers are known as external failure costs. These costs are incurred as a result of customer complaints, returns, repairs, and warranty claims, and they have a direct effect on a company's reputation and bottom line. Examples of external failure costs include lost sales, legal expenses, liability claims, and the cost of replacing or repairing defective products.

Costs Incurred When Products and Services Fail to Conform to Requirements