US CMA Part 1 · Chapter 4 · Question 17 of 22
Under a cost of quality framework, the cost of repairing products returned by customers under warranty is classified as:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) An external failure cost
Explanation
External failure costs arise after defective products reach the customer, including warranty repairs, returns and lost goodwill. Internal failure costs (such as scrap and rework) are found before shipment, appraisal costs relate to inspection, and prevention costs are incurred to stop defects occurring.
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