Lower Sales Due to Poor Product Performance Is an Example

question 52

Multiple Choice

Lower sales due to poor product performance is an example of

• A)a prevention cost.
• B)an internal failure cost.
• C)an appraisal cost.
• D)external failure costs.

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Definitions:

Conversion Cost

The sum of direct labor and manufacturing overhead costs, representing the expenses necessary to convert raw materials into finished goods.

Process Costing

An accounting methodology used for homogeneous products, allocating costs over the entire production process rather than per individual item.

Equivalent Unit

A concept used in process costing that converts partially completed units into a number of equivalent fully completed units.

Conversion

Conversion involves the process of transforming raw materials or inputs into finished products or outcomes in manufacturing and production contexts.