(1)

Springdale Company reported sales of $6,000,000 in 2004. At the end of the year, the following quality
costs were reported:

Design review 300,000

Recalls 100,000

Reinspection 50,000

Material inspection 40,000

Quality training 100,000

Process acceptance 50,000

Scrap 35,000

Lost sales 200,000

Product inspection 30,000

Returned goods 95,000

Required:

Prepare a quality cost report.

(2)

Classify the following quality costs as prevention costs, appraisal costs, internal failure costs or external
failure costs:

(1) Finished units discarded by the company because they are defective and cannot be reworked
(2) Inspecting components purchased from outside suppliers
(3) Reworking a defective product
(4) Repairing a television still under warranty
(5) Goods returned because they failed to meet customers specifications
(6) Goods returned because they were damaged in transit
(7) Training new personnel to recognize and act on quality problems
(8) Stopping work to correct process malfunction
(9) Settlement of a product liability suit
(10) Inspecting reworked products
(11) Lost sales because of incorrect product labeling
(12) Internal audit of statistical process control procedures
(13) Redesigning a product to eliminate the need to use an outside component with a high defect
rate.
(14)Purchase order changes
(15)Replacing a defective product
(16)Testing a new product to see if it functions according to specifications
(17)Repairing products in the field
(18)Correcting software error discovered during development
(19) Engineering resources used to help selected suppliers improve their product quality