External Failure Costs Are Costs That

question 131

Multiple Choice

External 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:

Treasury Bonds

Long-term government debt securities with a fixed interest rate, considered low-risk investments.

Interest Rate

The amount charged, expressed as a percentage of the principal, by a lender to a borrower for the use of assets.

Compounded Annually

Interest calculation method where the interest is added to the principal sum at the end of each year, affecting the total interest earned or paid.

Compound Interest

Interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan.