External Failure Costs are costs incurred when a product or service fails to meet quality standards and issues are detected after delivery to the customer. Which term describes this type of cost?

• A. External Failure Costs
• B. Internal Failure Costs
• C. Prevention Costs
• D. Appraisal Costs

Answer: (A)

Costs of quality are grouped by when a defect is detected. When a product or service fails to meet standards and the issue is found after it has been delivered to the customer, the costs tied to that defect fall under external failure costs. This includes warranty claims, returns, repairs, rework in the field, recalls, and the impact on customer satisfaction and reputation.

This category contrasts with internal failure costs (defects found before delivery, during production or QA), prevention costs (activities to stop defects from occurring), and appraisal costs (inspection and testing to identify defects before release). So the described costs align with external failure costs because the failure is discovered after the product reaches the customer.