Question

A number of activities that are a part of a company's quality control system are listed below.

(a) Product testing
(b) Product recall
(c) Product design
(d) Quality circle
(e) Inspection of goods

Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost.

Answer 1

Following is the classification of the costs associated with each of these activities that is prevention cost, appraisal cost, internal failure cost, or external failure cost.

(a) Product testing - Appraisal Cost

(b) Product recall - External Failures

(c) Product design - Prevention cost

(d) Quality circle - Prevention cost

(e) Inspection of goods - Appraisal Cost

Explantion cost:

Appraisal costs are costs incurred to detect defects in the poduct produce. Prevention cost are cost incurred to prevent detects in the product produce.

Internal failure costs are costs incurred to remove defects found before the customer receives the product or service. External failure costs are costs incurred to remove defects found after the customer receives the product or service.