The cost of evaluating potential raw material suppliers is an example of a(n):
A)internal failure cost.
B)prevention cost.
C)external failure cost.
D)appraisal cost.

Question

Quizplus · Accepted Answer

The cost of evaluating potential raw material suppliers is an example of a prevention cost. Prevention costs are costs incurred to prevent defects from occurring or to ensure that defects are found in the early stages of production. In this case, the company is evaluating suppliers to ensure that they provide raw materials of the required quality and specifications, which will help in preventing defects in the production process.

The Cost of Evaluating Potential Raw Material Suppliers Is an Example