Which term listed below describes costs incurred when the company fails to detect poor quality goods or services?
A) Internal failure costs
B) Value-added activity
C) Just-in-time production
D) External failure costs

Question

Quizplus · Accepted Answer

External failure costs are costs incurred when poor quality goods or services are not detected and make their way to the customer. These can include costs associated with returns, repairs, warranties, legal action, and damage to the company's reputation. Internal failure costs, on the other hand, are costs incurred when poor quality goods or services are detected before they reach the customer. Value-added activity refers to any activity that adds value to a product or service, while just-in-time production is a philosophy of manufacturing that aims to minimize inventory and maximize efficiency.

Which Term Listed Below Describes Costs Incurred When the Company