Hauschlager Corp. produces and supplies automotive manufacturers with the mechanisms used to adjust the positions of front seating units. Several competitors have recently entered the market, and management is concerned that the quality of the company’s current products may be surpassed by the quality of the new competitors’ products. The controller was asked to conduct an analysis of the efforts in January to improve product quality. His analysis generated the following costs of quality:

Training of employees .........$22,400

Customer service ........... 13,600

Reinspection of rework ......... 28,000

Quality audits ........... 31,300

Design review ............ 27,500

Warranty claims ........... 67,100

Sample testing of materials ...... 27,400

Returned goods ........... 98,700

Preventive maintenance ........ 26,500

Quality engineering .......... 18,700

Setup for testing new products ....... 42,100

Scrap and rework .......... 76,500

Losses caused by vendor scrap .... 65,800

Product simulation .......... 28,400

1. Prepare a detailed analysis of the costs of quality.

2. Comment on the company’s current efforts to improve product quality.