Which costs occur when a product or service that does not meet quality standards is identified before it reaches the customer?

Which costs occur when a product or service that does not meet quality standards is identified before it reaches the customer?

• A. Internal Failure Costs
• B. External Failure Costs
• C. Appraisal Costs
• D. Prevention Costs

Answer: (A)

Identifying a defect before the product or service reaches the customer means the problem was found and addressed inside the production or service process. Those costs are internal failure costs, which cover things like scrap, rework, retesting, and downtime while fixes are made. External failure costs would occur if the defect is found after delivery (returns, warranties, field service). Appraisal costs are the expenses of inspecting and testing to detect quality problems, and prevention costs are investments to stop defects from happening in the first place. So the situation described corresponds to internal failure costs.

Identifying a defect before the product or service reaches the customer means the problem was found and addressed inside the production or service process. Those costs are internal failure costs, which cover things like scrap, rework, retesting, and downtime while fixes are made. External failure costs would occur if the defect is found after delivery (returns, warranties, field service). Appraisal costs are the expenses of inspecting and testing to detect quality problems, and prevention costs are investments to stop defects from happening in the first place. So the situation described corresponds to internal failure costs.