- What Will Be the Total External Failure Cost Appearing

question 187

Multiple Choice

$\begin{array}{l}\text { Fabri Company's quality cost report is to be based on the following data: }\\\begin{array} { | l | r | } \hline \text { Liability arising from defective products } & \$ 56,000 \\\hline \text { Lost sales due to poor quality } & \$ 51,000 \\\hline \text { Test and inspection of in-process goods } & \$ 47,000 \\\hline \text { Quality circles } & \$ 17,000 \\\hline \text { Net cost of spoilage } & \$ 93,000 \\\hline \text { Debugging software errors } & \$ 29,000 \\\hline \text { Rework labour and overhead } & \$ 95,000 \\\hline \text { Final product testing and inspection } & \$ 32,000 \\\hline \text { Statistical process control activities } & \$ 61,000 \\\hline\end{array}\end{array}$
- What will be the total external failure cost appearing on the quality cost report?

• A) $80,000.
• B) $107,000.
• C) $324,000.
• D) $481,000.

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Definitions:

Creditor Beneficiaries

Third parties that benefit from a contract between two other parties because one party promises to pay a debt owed to the beneficiary.

Incidental Beneficiaries

Individuals or entities that unexpectedly benefit from a contract, despite not being directly involved in its formulations.

Creditor Beneficiary

A third party that benefits from a contract made between two other parties, especially regarding debt repayment.

Donee Beneficiary

In contract law, a person who benefits from the execution of a contract, though not one of the principle parties involved.