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    Classifying Costs: Failure, Prevention, or Appraisal

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    Please help with the following accounting problems. Provide at least 100 words.

    Companies that implement quality cost systems typically use four cost categories.
    Classify the following costs as internal failure, external failure, prevention, or appraisal:

    - Scrap
    - Warranty claims
    - First-part inspection of a new production run
    - Quality control education
    - Unexpected machine downtime for repairs
    - Litigation defense costs associated with product recalls
    - Vendor certification
    - Manufacturing process redesign

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    Solution Preview

    External failure costs are incurred by the producer when the defective or non-conforming product is shipped out of the factory and sold to the customer, who eventually discovers the defect. Examples of these are warranty claims, Litigation defense costs associated with product ...

    Solution Summary

    The following posting helps with a problem involving accounting standards. Concepts discussed in the solution include internal and external failures, quality cost systems and cost categories. The explanation is given in 160 words.