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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Internal failure costs are incurred

  1. a. to prevent poor quality in the products or services being produced.
  2. b. because products or services do not conform to requirements after being delivered to the customer.
  3. c. to determine whether products and services are conforming to their requirements.
  4. d. because products and services do not conform to specifications or customer needs prior to the product being shipped or the service being rendered to outside parties.

To determine

Identify the correct description of internal failure costs.

Explanation

Quality Cost:

Organizations are required to bear costs due to non-conformity of goods or services with the general specifications. These costs are termed as quality costs. Quality costs can be categorized into preventive costs, detective costs, internal failure costs and external failure costs.

d.

Internal failure costs are the costs incurred to rectify the defects found or for goods that are not in conformity with the quality required. These costs are incurred before goods are shipped or services are rendered to third parties. Therefore, this is the correct option...

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