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19-6TI

Expert-verified
Horngren'S Financial And Managerial Accounting
Found in: Page 1056

Short Answer

12. Identify the following costs as prevention, appraisal, internal failure, or external failure:

a. Inspection of final products

b. Sales returns of defective products

c. Employee training

d. Reworking defective products

e. Working with suppliers to ensure delivery of high-quality raw materials

f. Costs of warranty repairs

g. Product testing

Cost

Type of cost

a. Inspection of final products

Appraisal Cost

b. Sales returns of defective products

External Failure Cost

c. Employee training

Prevention Cost

d. Reworking defective products

Internal Failure Cost

e. Working with suppliers to ensure delivery of

high-quality raw materials

Prevention Cost

f. Costs of warranty repairs

External Failure Cost

g. Product testing

Appraisal Cost

See the step by step solution

Step by Step Solution

Prevention Cost

Prevention cost is the cost incurred on the programs or activities to avoid poor quality goods or services.

From the given list following are the prevention cost –

c) Employee training

e) Working with suppliers to ensure delivery of high-quality raw materials

Appraisal Cost

These are the cost to detect the poor quality of materials, goods, or services.

From the given list following are the appraisal cost –

a) Inspection of final products

g) Product testing

Internal failure cost

These are the cost incurred to correct poor quality of goods or services.

From the given list following are the internal failure cost –

d) Reworking defective products

External failure cost

These are the after-sale or service costs incurred to compensate the customers.

From the given list following are the external failure cost –

b) Sales return of defective products

f) cost of warranty repairs

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