In classifying the costs of quality at a company that manufactures sonar equipment,which of the following is considered an external failure cost?
A) the net cost of scrap and spoilage incurred during production.
B) the cost of repairs and replacements made during the warranty period.
C) the cost of debugging software errors found in the sonar equipment during inspection at the plant.
D) both B and C above.
E) none of the above.

Question

Quizplus · Accepted Answer

The cost of repairs and replacements made during the warranty period is considered an external failure cost because it is incurred after the product has been shipped to the customer and is no longer under the control of the manufacturer. Option A is a cost of internal failure because it occurs during production. Option C is also a cost of internal failure because it is incurred during inspection at the plant. Therefore, the correct choice is B.

In Classifying the Costs of Quality at a Company That