Final answer:
Costs aimed at reducing defects or identifying defective products before shipment are known as Prevention costs and Appraisal costs. Prevention costs involve preventive measures, while Appraisal costs are related to evaluating product quality. Other related costs include Internal and External failure costs.
Step-by-step explanation:
The costs that support activities aimed at reducing the number of defects or identifying defective products before they are shipped to customers are known as Prevention costs and Appraisal costs. Prevention costs are associated with activities designed to prevent defects from occurring in the first place. Examples include training, quality control systems, and process improvement initiatives. Appraisal costs, on the other hand, are costs related to evaluating products to ensure they meet quality standards and identifying defects before the products leave the factory. Inspections, testing, and quality audits are examples of appraisal activities.
Comparatively, Internal failure costs are incurred when defects are detected before products reach the customer, leading to scrap or rework, and External failure costs arise when customers find defects, resulting in returns, warranties, and potentially brand damage. Understanding these costs is crucial for businesses to manage quality effectively. An example of managing such costs can be seen in the efforts to reduce pollution, where businesses incur abatement costs. In 2005, the pollution abatement capital expenditures and operating costs in the US were nearly $27 billion.