N. Lions Corporation manufactures computer games. The following represents its financial information Costs of Quality

(LO 2) for two years.

Year | Year 2 SalOS iss Reduce: oe ae eee $3,920,000 $3,520,000 Costs PrOCESS INSDE CON: een eee 26,400 30,000 S Gia Dirastae saat coma ne eee 28,800 30,100 QwalityatcaiminGieeee-ceeee 305,000 220,000 WarramntyarepalSaesceamreentes: tee 70,000 75,000

= Testing EquipMeNnt............ 115,000 115,000 Customer complaints .............00: 44,500 54,200 ENAOL Miemanyouansatmanacedancns eeadenneeesene 272,000 195,000 Preventive maintenance .............. 220,000 152,000 Materials inspection..................... 105,000 75,000 FIGIGIESTIM Oh Sakon. wearer este esaaeus 150,000 200,000 Required

a. Classify these items into costs of prevention, appraisal, internal failure, or external failure activities.

b. Calculate the ratio of the prevention, appraisal, internal failure, and external failure costs to sales for year | and year 2.

c. Construct a cost-of-quality report for year 1 and year 2.