The incurred costs to exclude the production of goods, that do not meet the specification, are called ___________?
Correct answer: A. prevention costs
- A. prevention costs
- B. rework costs
- C. incremental costs
- D. reengineering costs
Explanation
Prevention costs are incurred to stop non-conforming goods from being produced in the first place. Rework costs, the tempting alternative, arise when defective goods must be corrected after production.
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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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