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Classifying types of costs

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The following costs were incurred by Osaka Metals Company to maintain the quality of its products. (Yen is the national currency in Japan).

1. Operating an X-ray machine to detect faulty welds, 110,000 yen.
2. Repairs of products sold last year, 116,000 yen.
3. Cost of rewelding faulty joints, 17,000 yen.
4. Cost of sending machine operators to a three week training program so they could learn to use new production equipment with a lower defect rate,18,100 yen.

Required: Classify each of these costs as a prevention, appraisal, internal failure, or external failure.

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Solution Summary

This solution involves classifying five different costs incurred by Osaka Metals Company as one of the following: prevention, appraisal, internal failure, or external failure.

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1. Operating an X-ray machine to detect faulty welds, 110,000 yen. - Appraisal - These costs relate to the assessment and evaluation of the quality of output produced by the company before the product is sold to the customer.

2. Repairs of products sold last year, 116,000 yen. - Internal failure - Repair expenses ...

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