CPIM Practice Exam

Which of the following is a component of internal failure costs?

1. Warranty claims

2. Rework costs

3. Market research costs

4. Training expenses

The correct answer is: Rework costs

Internal failure costs are expenses incurred because a product does not conform to quality standards before it has been delivered to the customer. Rework costs fall into this category as they represent the costs incurred to correct defects or shortcomings in a product that is already in the production process. This includes labor, materials, and overhead associated with fixing the product to meet quality requirements. Other options, while relevant in different contexts, do not pertain to internal failure costs. Warranty claims, for example, are associated with external failure costs, as they arise after a product has been sold and indicates a failure in quality. Market research costs are related to understanding customer needs and preferences, thus playing a role in research and development rather than directly impacting internal failures. Training expenses, although important for ensuring quality, are more related to prevention costs, which aim to avoid defects in the first place rather than costs associated with addressing failures that have already occurred during production.