A Manufacturing Firm Identified That It Would Have Difficulty Sourcing

question 43

Multiple Choice

A manufacturing firm identified that it would have difficulty sourcing raw materials locally,so it decided to relocate its production facilities.According to COSO,this decision represents which of the following response to the risk?

• A)Risk reduction.
• B)Prospect theory.
• C)Risk sharing.
• D)Risk acceptance.

---

Definitions:

Appraisal Cost

Expenses associated with evaluating or inspecting materials and products to ensure quality standards are met.

Quality Cost Report

A document that outlines the costs associated with preventing, detecting, and correcting defective work, categorized into prevention, appraisal, internal failure, and external failure costs.

External Failure Cost

Expenses related to products or services not meeting quality expectations post-delivery, encompassing returns, fixes, and warranty requests.

Quality Cost Report

A document that summarizes the costs associated with preventing, detecting, and correcting defective work, typically classified into prevention, appraisal, and failure costs.