Answer (B) is correct . IMA’s Management Accounting Glossary lists four categories of quality costs:? prevention, appraisal, internal failure, and external failure (lost opportunity). Costs of prevention include attempts to avoid defective output, including employee training, review of equipment design, preventive maintenance, and evaluation of suppliers. Appraisal costs include quality control programs, inspection, and testing. Internal failure costs are incurred when detection of defective products occurs before shipment, including scrap, rework, tooling changes, and downtime. External failure costs are incurred after the product has been shipped, including the costs associated with warranties, product liability, and customer ill will.
Answer (A) is incorrect because Carrying cost is not one of the elements of quality costs.
Answer (C) is incorrect because Training costs are not a category of quality costs.
Answer (D) is incorrect because Warranty, product liability, and training are not cost categories identified by IMA’s Management Accounting Glossary .
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