Internal Failure Costs Are Costs That

question 132

Multiple Choice

Internal failure costs are costs that:

• A)are incurred to prevent quality problems from occurring in the first place.
• B)are incurred to identify defective products before products are shipped to the customer.
• C)result from defects that are caught before the product is shipped to the customer.
• D)occur when a defective product makes its way into the hands of the customer.

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Definitions:

Diversify Risk

The strategy of spreading investments across various financial instruments, industries, or other categories to reduce risk.

Synergies

The additional value created by combining two companies or entities, often realized through cost savings, increased revenues, or enhancements in productivity.

Cost of Equity

The return a company theoretically pays to its equity investors, i.e., shareholders, to compensate for the risk they undertake by investing their capital.

Acquisition

The process of acquiring control of another company by purchasing its shares or assets.