Which of the following is an internal failure cost?

Internal failure costs are associated with defects found before the product or service is delivered to the customer. These costs arise from identified issues within the company’s own processes, primarily during inspections or quality control checks.

Rework due to defects represents costs incurred to fix products that do not meet quality standards prior to delivery. This aligns with the concept of internal failure costs because the company is rectifying mistakes that were detected internally, ensuring that the final product can meet the required specifications.

In contrast, warranties and repairs pertain to costs associated with defects that are identified after the product has been sold, thus categorizing them as external failure costs. The cost of quality audits relates to assessing processes and systems to prevent defects rather than correcting them, which does not fit under internal failure costs. Regulatory fines are penalties imposed for not adhering to regulations, a separate concern not classified under failure costs.