Which of the following activity costs is classified as external failure costs?
A)Cost of obtaining ISO 14001 certification
B)Cost of restoring land to its natural state
C)Cost of verifying a supplier's environmental performance
D)Cost of licensing facilities for producing contaminants

Question

Quizplus · Accepted Answer

External failure costs are costs incurred after a defect is discovered by the customer. Restoring land to its natural state is an example of an external failure cost as it is a cost incurred after the product or service has been delivered and a defect (environmental damage) has been discovered. The other choices are not examples of external failure costs.

Which of the Following Activity Costs Is Classified as External