Which of the following would be classified as an external failure cost on a quality cost report?

A) Reentering data because of keying errors.
B) Customer returns arising from quality problems.
C) Test and inspection of in-process goods.
D) Rework labor and overhead.

Customer returns arising from quality problems are considered external failure costs because they occur after the product has been delivered to the customer and are a result of quality issues with the product. Reentering data because of keying errors would be classified as a prevention cost. Test and inspection of in-process goods would be a part of appraisal costs. Rework labor and overhead would be considered an internal failure cost.