All of the following are examples of an external failure except
A) refunds to customers.
B) transportation costs to return defective products.
C) factory recalls.
D) raw materials costs.
E) possible lawsuits.

Question

Quizplus · Accepted Answer

Raw materials costs are not an example of external failure because they do not involve selling or distributing defective products to customers. Instead, they are a cost incurred by the company in the procurement of materials to manufacture its products. Refunds, transportation costs to return defective products, factory recalls, and possible lawsuits are all examples of external failures because they result from defects in the company's products that have been sold or distributed to customers.

All of the Following Are Examples of an External Failure