FMI Is a Car Manufacturer

question 81

Multiple Choice

FMI is a car manufacturer. Recently, they have had to recall approximately 6,000 cars due to potential brake pad malfunction. The costs to inspect and replace the brake pads would most likely be classified as which type of quality cost?

• A) Appraisal (detection) costs
• B) External failure costs
• C) Internal failure costs
• D) Prevention costs

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Definitions:

Depletion Expense

An accounting and tax concept used to allocate the cost of extracting natural resources from the Earth over the period of extraction.

Extracted

Removed or taken out, often referring to the process of obtaining specific data or substances from a larger set or material.

Sold

Refers to the completion of a transaction where goods or services are exchanged for payment.

Recording Depreciation

The process of allocating the cost of a tangible asset over its useful life to reflect its decrease in value over time.