External Failure Cost

External failure cost is a cost of quality related to acknowledging and remedying the defects a consumer detects post product usage. In other words, the costs associated with warranty and repair, customer support, returned products, penalties for poor product quality, etc. are external failure costs. The costs also account certain other costs such as loss […]

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Internal Failure Cost

Internal failure cost is a cost of quality that relates to the cost of producing goods not conforming to the prescribed standards. Product rework, scrap, wasted labor or machine, etc. are some examples. When a quality inspection team rejects an item, it is either trashed or sent back for rework. The reworked product’s manufacturing costs […]

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Cost of Goods Sold

Cost of goods sold (CoGS) is an accounting term referring to all direct costs incurred when producing a good. In other words, it’s the sum of all direct costs attributable to a specific good’s production. For example, raw material, labor and packaging costs comprise a product’s cost of goods sold. At times, overhead costs, freight charges, manufacturing […]

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