External Failure Costs Definition | Becker

Accounting Dictionary

External Failure Costs

 

  1. External failure costs are costs to cure a defect discovered after a product is sent to the customer. These costs include warranty costs, costs of returning the goods, liability claims, and the cost of lost customers. See also internal failure costs. Costs that an entity incurs when it detects nonconforming products or services after delivering them to customers (e.g., warranty repairs and product liability).

 

Related Terms:

Internal Failure Costs [BAR]Back to Dictionary

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