The Costs That Follow Appeared on the Quality Cost Report

question 24

Multiple Choice

The costs that follow appeared on the quality cost report of Greggor Incorporated: $\begin{array} { l r } \text { Quality training } & \$ 40,000 \\\text { Customer complaints } & 6,500 \\\text { Warranty costs } & 16,000 \\\text { Rework of defective units } & 13,000 \\\text { Raw-materials inspection } & 8,000\end{array}$ The sum of Greggor's appraisal and internal failure costs is:

• A)$8,000.
• B)$13,000.
• C)$21,000.
• D)$77,000.
• E)$83,500.

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Definitions:

External Benefits

Positive effects of an economic transaction experienced by people or entities not directly involved in the transaction.

External Costs

Costs that are not borne by the producer or consumer but by third parties or society at large, such as pollution or resource depletion.

External Benefit

A positive effect on a party who did not choose to incur that benefit, often associated with public goods or services.

Public‐spirited

Exhibiting a selfless concern for the well-being of the community and the willingness to act for the public good.