Which term reflects the costs incurred to assess product compliance with quality requirements?

Appraisal costs are specifically associated with the activities undertaken to determine whether products or services meet specified quality standards. These costs include expenses related to inspection, testing, and evaluation processes that organizations implement to ensure that their outputs comply with quality requirements before they reach the customer.

Investing in appraisal activities is essential for detecting defects or deviations in products and processes early in the production phase. This proactive approach helps maintain quality levels, thereby reducing the likelihood of more significant expenses that could arise from failures or non-compliance afterward.

Prevention costs pertain to expenses related to efforts that aim to prevent defects before they occur, such as quality improvement initiatives and training programs. Failure costs occur when products do not meet quality standards and include internal failure costs (e.g., scrap, rework) and external failure costs (e.g., warranties, returns). Operating costs are broader and comprise all expenses related to the day-to-day functions of an organization which are not specifically tied to quality assessments.

Therefore, appraisal costs are the most accurate term reflecting the costs incurred to assess product compliance with quality requirements.