An inspector at a shirt manufacturer discovered that over fifteen hundred shirts were manufactured with incorrect buttons. The manufacturer sold the shirts at 70% of the normal price to a retailer who specializes in "factory seconds." The revenue lost by the manufacturer is considered:

An inspector at a shirt manufacturer discovered that over fifteen hundred shirts were manufactured with incorrect buttons. The manufacturer sold the shirts at 70% of the normal price to a retailer who specializes in "factory seconds." The revenue lost by the manufacturer is considered:



a. a prevention cost.

b. an appraisal cost.

c. an internal failure cost.

d. an external failure cost



Answer: c. an internal failure cost.


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