Which of the following costs of quality is a failure cost?
Answer(s): C
Failure costs are incurred after defective output has been removed from production. A contract penalty for faulty goods is an example of an external failure cost.
Listed below are costs of quality that a manufacturing company has incurred throughout its operations.The U.S. dollar amount of the costs of quality classified as prevention costs for the manufacturing firm would be:
Answer(s): B
Prevention costs are incurred to prevent defects. Examples are the costs of employee training, review of equipment design, preventive maintenance, and evaluation of suppliers. Accordingly, the prevention costs equal US $701,000 ($275,000 design reviews + $180,000 process engineering + $90,000 scheduled maintenance + $156,000 training).
The costs of quality that are incurred in detecting units of product that do not conform to product specifications are referred to as:
Appraisal activities include inspection and testing. Appraisal costs (such as test equipment maintenance and destructive testing) are incurred to detect products not conforming to specifications.
Listed below are selected line items from the cost-of-quality report for Company B for last month Category:What is Company B's total prevention and appraisal cost for last month?
Answer C is correct. Prevention costs are incurred to prevent defects from occurring. An example is equipment maintenance. Appraisal costs are incurred to detect defective output during and after the production process. An example is product testing. Thus, total prevention and appraisal cost for the month equals US $1,940 (US$1,154 + US $786).
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