External Failure Costs Include the Following Costs Except __________ Costs

question 17

Multiple Choice

External failure costs include the following costs except __________ costs.

• A)price-downgrading
• B)product-return
• C)warranty claims
• D)lost sales

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Definitions:

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenues.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed versus variable costs a company has.

Degree of Operating Leverage

A financial ratio that measures the sensitivity of a company's earnings before interest and taxes (EBIT) to a percentage change in sales, indicating the impact of fixed costs on profits.

High-low Method

The high-low method is an accounting technique used to estimate the variable and fixed costs of a business based on the highest and lowest levels of activity.