Which of the following would be classified as an external failure cost on a quality cost report?
A)Depreciation of test equipment.
B)Re-entering data because of keying errors.
C)Rework labor and overhead.
D)Liability arising from defective products.

Question

Quizplus · Accepted Answer

Liability arising from defective products is an example of an external failure cost because it is a cost incurred due to a defective product that has already been shipped to the customer. The other options are examples of internal failure or appraisal costs. Depreciation of test equipment is an example of an appraisal cost, re-entering data because of keying errors is an internal failure cost, and rework labor and overhead is also an example of internal failure cost.

Which of the Following Would Be Classified as an External