Within a Cost-Of-Quality (COQ) System, Product Liability Resulting from a Legal

question 15

Multiple Choice

Within a Cost-of-Quality (COQ) system, product liability resulting from a legal action is classified as a(n) :

• A) Internal failure cost.
• B) External failure cost.
• C) Legal cost.
• D) Administrative expense.
• E) Manufacturing overhead cost.

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Definitions:

Target Net Profit

A specific financial goal for net income that a company aims to achieve within a certain period.

Contribution Margin Ratio

The ratio of contribution margin (sales minus variable costs) to sales revenue, showing the proportion of sales revenue that exceeds variable costs.

Price Increase

An adjustment in the cost of goods or services, typically resulting in consumers paying more for those items.

Contribution Margin Ratio

A financial metric that measures how much of a company's revenue is left over after variable costs are subtracted, expressed as a percentage of sales revenue.