Costs Incurred by Defects That Occur Prior to Delivery to the Customer

question 24

Multiple Choice

Costs incurred by defects that occur prior to delivery to the customer are called:

• A)external failure costs.
• B)internal failure costs.
• C)appraisal costs.
• D)prevention costs.

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Definitions:

Machine-hours

A measure of the amount of time machines are operated, used in allocating overhead costs.

Direct Labour Cost

The total expense of wages paid to workers directly involved in the manufacturing process or production of goods or services.

Cost of Goods Manufactured

The total production cost of goods completed during a specific period, including labor, material, and overhead costs.

Manufacturing Overhead Applied

The portion of manufacturing overhead costs allocated to individual units of production based on a predetermined overhead rate.