Question

The cost of reworking defective components is an example of: 

• appraisal costs. 

• prevention costs. 

• internal failure costs. 

• external failure costs.

Answer 1

Correct answer----internal failure cost.

Internal failure cost is the cost that has been incurred inside the factory before shipping to the customer or say before selling to the customer.

External failure cost is cost is cost incurred in repair after sale to product such as warranty cost.

Rework on defective product is an example of internal failure cost.