EDD, Inc., produces state-of-the-art communication devices for military applications. Each year, the company incurs significant expense to rework completed units that fail product tests. These expenditures are an example of:
A) Prevention costs.
B) Detection costs.
C) Internal failure costs.
D) External failure costs.

Question

Quizplus · Accepted Answer

Internal failure costs are expenses incurred to fix defects found before the product is delivered to the customer, which aligns with the scenario of EDD, Inc., incurring significant expense to rework completed units that fail product tests.

EDD, Inc, Produces State-Of-The-Art Communication Devices for Military Applications