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The manager at Seaside International prepares a Cost of Quality report to report the following expenses: Inspection of raw ma
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  • External failure costs are those cost that occurred when the product reaches the customer. These basically include Warranty cost and return cost.
  • Here, External cost of failure
    = $ 300000 warranty cost + $ 200000 recall cost
    = $ 500,000
  • Correct Answer = Option ‘A’ $ 500,000
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