A Salesperson Contacted the Risk Manager to Report Substantial Damage

question 21

Multiple Choice

A salesperson contacted the risk manager to report substantial damage to a customer's production line due to malfunction of equipment purchased 12 months earlier.Why was a lawyer was not contacted and advised of the event directly by the salesperson?

• A) The limitation of liability in the contract was not known.
• B) Sales departments are not part of risk management.
• C) The customer has not commenced legal action yet.
• D) Authority to contact legal counsel is restricted.

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Definitions:

Equivalent Units

Units of production expressed in terms of fully completed units, used in manufacturing cost calculations to account for partial work.

Molding Department

A specialized section in a manufacturing facility where molding processes, such as injection or blow molding, are used to shape plastic or other materials into products.

Work In Process Inventory

Goods partially completed in the manufacturing process, not yet ready for sale.

Merchandise Inventory

This term refers to the finished goods acquired for resale by a company, forming a crucial part of its current assets on the balance sheet.