Product-Quality-Related Costs Are Part of a Total Quality Control Program

question 64

Multiple Choice

Product-quality-related costs are part of a total quality control program. A product-quality-related cost incurred in detecting individual products that do not conform to specifications is an example of a(n) :

• A) Prevention cost.
• B) Appraisal cost.
• C) Internal failure cost.
• D) External failure cost.
• E) Opportunity cost.

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Definitions:

Market Price

The prevailing rate at which a service or asset is offered for sale or purchase in a market.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Net Income

The net earnings of a company once all costs and taxes are subtracted from the total income.

Stockholders' Equity

Stockholders' equity represents the owners' claim after subtracting total liabilities from total assets, indicating the net worth of a company from the shareholders' perspective.