​Which of the Following Is True of Internal Failure Costs

question 98

Multiple Choice

​Which of the following is true of internal failure costs?

• A) ​These are costs of preventing or detecting poor quality.
• B) ​These costs are incurred to determine whether products and services are conforming to their requirements.
• C) ​These costs are incurred when lack of conformity to requirements is discovered prior to external sale.
• D) ​These are costs that can be most devastating of all the quality costs.

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Definitions:

Markup

The sum added onto the purchase price of merchandise to cover both overhead expenses and profit, ultimately setting the retail price.

Predetermined Overhead Rate

A calculated rate used to assign overhead costs to products or services, based on estimated costs and activity levels.

Machine-Hours

The total time that machines are running in a production process, often used as a basis for allocating manufacturing overhead costs.

Job-Order Costing System

An accounting method that tracks costs individually for each job, suitable for companies producing unique or custom products.