1.
Prevention Cost:
Prevention costs incurred to reduce the defects in the products that are to be produced. These are pre planned costs and are incurred before the commencement of production.
Appraisal Cost:
Appraisal costs are associated with the measurement and monitoring of activates relating to quality of a product. It includes the cost of evaluation of product material and production process.
Internal failure costs:
Internal failure costs are those that are incurred because of the production of products that are not manufactured as per the requirements of the consumer but are identified before the delivery of the product to its buyer.
External Failure Cost:
External failure cost relate to the defects found out in the products because the product was not manufactured as per the requirements of the customer but are identified after the actual delivery of the product to its buyer.
To determine: Whether to change the component of the printing press or not.
2.
The additional number of printing press that are to be sold in order to justify the investment in new component.
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Horngren's Cost Accounting, Student Value Edition (16th Edition)
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