- What Will Be the Total External Failure Cost Appearing

question 143

Multiple Choice

$\begin{array}{l}\text { Faast Company's quality cost report is to be based on the following data: }\\\begin{array} { | l | r | } \hline \text { Quality engineering } & \$ 86,000 \\\hline \text { Quality circles } & \$ 53,000 \\\hline \text { Supervision of testing and inspection activities } & \$ 92,000 \\\hline \text { Net cost of scrap } & \$ 96,000 \\\hline \text { Test and inspection of in-process goods } & \$ 16,000 \\\hline \text { Liability arising from defective products } & \$ 13,000 \\\hline \text { Warranty repairs and replacements } & \$ 62,000 \\\hline \text { Debugging software errors } & \$ 86,000 \\\hline \text { Rework labour and overhead } & \$ 29,000 \\\hline\end{array}\end{array}$
- What will be the total external failure cost appearing on the quality cost report?

• A) $75,000.
• B) $109,000.
• C) $286,000.
• D) $533,000.

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Definitions:

Marginal Productivity

The additional output resulting from the use of one more unit of a production factor.

Wages

Payments made to labor for their services, typically expressed per hour or per annum.

Wage Paid

The compensation given to labor for the service provided, usually calculated as an hourly, daily, or per task basis.

Market

A place or system where goods and services are exchanged between buyers and sellers.