The costs incur for defective products, before their shipment to customers can be categorized as ___________?
Correct answer: D. internal failure costs
- A. prevention costs
- B. external failure costs
- C. appraisal costs
- D. internal failure costs
Explanation
Internal failure costs arise when defective products are identified and corrected before shipment to customers. Defects discovered after delivery are classified as external failure costs.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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