If prevention costs are increased to fund engineering work and defects are reduced, this yields a reduction in which cost category?

If prevention costs are increased to fund engineering work and defects are reduced, this yields a reduction in which cost category?

• A. Prevention Costs
• B. Appraisal Costs
• C. Failure Costs
• D. External Failure Costs

Answer: (C)

Reducing defects lowers the costs tied to problems that slip into or after production. When you spend more on prevention, the defect rate goes down, so the costs from failures—both internal (scrap, rework) and external (warranty, returns)—also drop. Therefore the overall category that decreases is Failure Costs. External failure costs would fall too, but the broader Failure Costs category captures the reduction across all failure-related expenses. Appraisal costs and prevention costs aren’t the primary costs that decrease when defects fall—the focus is on the costs incurred because defects exist, which shrink as defects become rarer.

Reducing defects lowers the costs tied to problems that slip into or after production. When you spend more on prevention, the defect rate goes down, so the costs from failures—both internal (scrap, rework) and external (warranty, returns)—also drop. Therefore the overall category that decreases is Failure Costs. External failure costs would fall too, but the broader Failure Costs category captures the reduction across all failure-related expenses. Appraisal costs and prevention costs aren’t the primary costs that decrease when defects fall—the focus is on the costs incurred because defects exist, which shrink as defects become rarer.