Answer (C) is correct . According to IMA’s Management Accounting Glossary , internal failure costs are incurred when detection of defective products occurs before shipment. Examples of internal failure costs are scrap, rework, tooling changes, and downtime.
Answer (A) is incorrect because Training costs are prevention costs.
Answer (B) is incorrect because The costs of external failure, such as warranty expense, product liability, and customer ill will, arise when problems are discovered after products have been shipped.
Answer (D) is incorrect because Prevention costs are incurred to avoid defective output. Examples include preventive maintenance, employee training, review of equipment design, and evaluation of suppliers.
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