Certified Quality Engineer (CQE) Practice Exam 2025 - Comprehensive All-in-One Study Guide for Exam Success!

Internal failure costs refer to expenses incurred by a company to fix defects or issues found before products or services are delivered to the customer. These costs are directly associated with the processes involved in production or service delivery and indicate a failure in quality control.

Scrap and rework costs are prime examples of internal failure costs. Scrap refers to materials or products that cannot be reused or sold due to defects, resulting in a complete loss of those materials. Rework involves additional labor and materials needed to correct defective products so they can meet quality standards. Both of these costs arise from failures that occur during the manufacturing or service provision process, highlighting the need for effective quality management systems to minimize such failures.

In contrast, warranty claims are external, as they occur after a product has been delivered and used by customers. Research and development expenses, while related to quality, are aimed at creating new products or improving existing ones rather than addressing failures. Customer support services involve assisting customers after product delivery and do not relate directly to internal failures in the production or service processes. Therefore, the focus on scrap and rework costs clearly identifies it as an internal failure cost.