Water Industries' Quality Control Report for August Contains the Following

question 103

Multiple Choice

Water Industries' quality control report for August contains the following items:
$\begin{array}{ll}\text { Gathering, analysis, and reporting quality data}&\$1,000\\\text { Inspecting raw materials received from vendors}&2,000\\\text { Testing and inspecting finished products }&3,000\\\text { Visiting customer sites to test product}&4,000\\\text { Designing product to reduce production problems } & 5,000 \\\text { Repairing and/or replacing products under warranty } & 6,000 \\\text { Maintaining the equipment used to gather quality data } & 7,000 \\\text { Cost (net) of materials wasted during production } & 8,000\end{array}$

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What would be the total of the external failure costs on the August quality control report for Water Industries?

• A) $4,000.
• B) $6,000.
• C) $7,000.
• D) $14,000.

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Definitions:

Implicit Cost

The opportunity cost equal to what a firm must give up in order to use resources it already owns, without paying rent or purchasing them.

Economic Profits

The difference between a firm's total revenue and its total costs, including both explicit and implicit costs.

Accountants

Professionals responsible for managing and auditing financial records, ensuring accuracy and compliance with legal requirements.

Short Run

Describes a period in which some factors of production or inputs are fixed, limiting the ability of a business to fully adjust to market changes.