Costs Incurred When Products and Services Prior to Being Delivered

question 144

Multiple Choice

Costs incurred when products and services prior to being delivered do not conform to specifications or customer needs are

• A) prevention costs.
• B) appraisal costs.
• C) a different category of quality-related costs.
• D) external failure costs.
• E) internal failure costs.

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Definitions:

Activity-based Costing

A costing method that identifies the activities that a firm performs and then assigns indirect costs to products based on each product's use of those activities.

Activity Cost Pools

Groupings of individual costs related to a particular activity, used in activity-based costing to allocate costs more accurately.

Direct Labor-hours

The overall hours that workers, who are a part of the manufacturing operations, put in.

Activity-based Costing

A costing method that allocates overhead costs to products based on the activities required to produce those products.