- 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:

Amortization

The process of spreading out a loan into a series of fixed payments over time, where part of each payment goes toward the principal amount borrowed and part goes toward interest.

Depreciation

A method of allocating the cost of a tangible asset over its useful life.

Tangible Assets

Tangible assets are physical assets that have a finite monetary value and physical presence, such as machinery, buildings, and land.

Retained Earnings

Retained earnings are the portion of a company's profits that is kept or retained and not paid out as dividends to shareholders but reinvested in its core business or to pay debt.