Which of the following cost items should be classified as an external failure cost on a cost of quality report?
A) Net cost of scrap
B) Customer returns of defective products
C) Technical support provided to suppliers
D) Supplies used in the quality inspection program

Question

Quizplus · Accepted Answer

External failure costs are costs incurred after the product has been delivered and they include expenses such as returns, repairs, and warranty claims made by customers. Customer returns of defective products are a classic example of an external failure cost. Net cost of scrap, technical support provided to suppliers and supplies used in the quality inspection program would typically be categorized as prevention costs, appraisal costs or internal failure costs.

Which of the Following Cost Items Should Be Classified as an External