The cost of disposing of defective units would be classified as a(n):
A) prevention cost.
B) appraisal cost.
C) internal failure cost.
D) external failure cost.

Question

Quizplus · Accepted Answer

The cost of disposing of defective units is considered an internal failure cost because it is a cost incurred after the defect has already been produced and identified within the company's own operations. This cost could include the cost of sorting and disposing of the defective units, potentially including fees for recycling or hazardous waste disposal. Prevention costs are incurred to prevent defects from occurring in the first place, appraisal costs are for evaluating products to ensure they meet quality standards, and external failure costs are incurred when defects are discovered by customers or other external parties.

The Cost of Disposing of Defective Units Would Be Classified