Question

Schedule of Activity Costs
Quality Control Activities	Activity Cost
Product testing	$55,000
Assessing vendor quality	26,000
Recalls	18,000
Rework	29,000
Scrap disposal	8,000
Product design	30,000
Training machine operators	46,000
Warranty work	12,000
Process audits	22,000

From the above schedule, calculate the internal failure costs.
$

Answer 1

• Internal Failure costs are cost incurred before the goods the sold to customers and these are incurred because of the product being produced with defects.

Rework	$29,000
Scrap disposal	$8,000
Total Internal Failure Cost	$37,000 = Answer

--Note:

Product testing	$55,000	Appaisal Cost
Assessing vendor quality	$26,000	Appaisal Cost
Recalls	$18,000	External Failure cost
Rework	$29,000	Internal Failure cost
Scrap disposal	$8,000	Internal Failure cost
Product design	$30,000	Preventive Cost
Training machine operators	$46,000	Preventive Cost
Warranty work	$12,000	External Failure cost
Process audits	$22,000	Appaisal Cost