Internal Failure Costs Definition | Becker

Accounting Dictionary

Internal Failure Costs

 

  1. Internal failure costs are the costs to cure a defect before the product is sent to a customer. Internal failure costs include rework costs, scrap, tooling changes, and downtime. See also external failure costs. Costs incurred when an entity detects nonconforming products or services before delivering them to customers. Examples include scrap, rework, and retesting.

 

Related Terms:

External Failure Costs [BAR]Back to Dictionary

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