Which of the following would be classified as an external failure cost on a quality cost report?

• A. Costs of reworking defective units before shipment
• B. Costs of training employees in quality control procedures
• C. Costs of inspecting products during production
• D. Costs incurred from repairing products returned by customers

Answer: (D)

Verified step by step guidance

1. Understand the concept of external failure costs: External failure costs are incurred when defective products or services are identified after they have been delivered to customers. These costs typically include warranty claims, repairs, replacements, and loss of customer goodwill.
2. Analyze the options provided: Review each option to determine whether it represents an external failure cost or another type of quality cost (e.g., prevention, appraisal, or internal failure costs).
3. Option 1: Costs of reworking defective units before shipment. This is classified as an internal failure cost because the defect is identified and corrected before the product reaches the customer.
4. Option 2: Costs of training employees in quality control procedures. This is classified as a prevention cost because it involves proactive measures to avoid defects in the first place.
5. Option 3: Costs incurred from repairing products returned by customers. This is classified as an external failure cost because the defect is identified after the product has been delivered to the customer, requiring repair or replacement.