A judge rules that a lawn mower manufacturer must pay a liability settlement to a consumer who was injured using a defectively produced lawn mover.The cost of the settlement represents what type of cost to the manufacturer?
A)Prevention
B)Internal failure
C)Appraisal
D)External failure

Question

Quizplus · Accepted Answer

The cost of the liability settlement represents an external failure cost for the manufacturer. This is because the defectively produced lawn mower caused harm to a consumer outside of the company's operations. The manufacturer may also incur additional costs for customer support, legal fees, and potentially negative publicity.

A Judge Rules That a Lawn Mower Manufacturer Must Pay