Spending on testing a product before shipment to customers is classified as which type of quality cost?

• A. Internal failure cost
• B. External failure cost
• C. Prevention cost
• D. Appraisal cost

Answer: (D)

Verified step by step guidance

1. Understand the concept of quality costs: Quality costs are categorized into four types—Prevention costs, Appraisal costs, Internal failure costs, and External failure costs. Each type represents a different aspect of ensuring or addressing product quality.
2. Define Appraisal costs: These are costs incurred to inspect, test, and verify that products meet quality standards before they are shipped to customers. The goal is to detect defects before the product reaches the customer.
3. Differentiate Appraisal costs from other quality costs: Prevention costs are related to activities that prevent defects (e.g., training, process improvements). Internal failure costs arise from defects found before delivery (e.g., rework). External failure costs occur when defects are found after delivery (e.g., warranty claims). Appraisal costs focus on testing and inspection during production.
4. Relate the problem to Appraisal costs: Spending on testing a product before shipment aligns with the definition of Appraisal costs because it involves verifying product quality to prevent defective items from reaching customers.
5. Conclude the classification: Based on the explanation, testing a product before shipment is classified as an Appraisal cost, as it is part of the quality assurance process to ensure compliance with standards.