ExpertEasy1 markMultiple Choice
CPA · Question 06 · Area 1: Business Analysis
An analyst is reviewing the 'Cost of Quality' report for a manufacturing firm. The report lists the following costs:<br/>1. Warranty claims processing<br/>2. Quality engineering and training<br/>3. Final product testing and inspection<br/>4. Rework of defective units before shipping<br/><br/>Which of these is classified as an 'Internal Failure Cost'?
An analyst is reviewing the 'Cost of Quality' report for a manufacturing firm. The report lists the following costs:<br/>1. Warranty claims processing<br/>2. Quality engineering and training<br/>3. Final product testing and inspection<br/>4. Rework of defective units before shipping<br/><br/>Which of these is classified as an 'Internal Failure Cost'?
Answer options:
A.
Warranty claims processing
B.
Quality engineering and training
C.
Final product testing and inspection
D.
Rework of defective units before shipping
How to approach this question
Categorize each cost: Prevention (stop defects happening), Appraisal (check for defects), Internal Failure (fix defects before shipping), External Failure (fix defects after shipping).
Full Answer
D.Rework of defective units before shipping✓ Correct
D
Cost of Quality categories:<br/>- Prevention: Training, engineering (Item 2)<br/>- Appraisal: Testing, inspection (Item 3)<br/>- Internal Failure: Rework, scrap, downtime (Item 4)<br/>- External Failure: Warranty, returns, lawsuits (Item 1)
Common mistakes
Confusing Appraisal (checking) with Internal Failure (fixing what was found).
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