Owenborri i ; ve : bees ; borrogh Corporation manufactures air conditioners. The following represents financial informa Costs of Quality tion for two years:

(LO 2)

Year | Year 2 Sella reine eatenacnetaar e ee$ 2,450,000 $2,200,000 Costs Process inspection .............c0.0 16,500 18,800 SIOGE Olesak coh hk cet agen fe UR IR 18,500 19,300

@Ualitvatraimnin Geren ereee ay et 198,000 130,000 MV ative miVale DaliSanmmneesn areem nei n 43,000 48,000 Testing EquipMeNt «0.0... see. 70,000 70,000 Customer complaints .................. 28,000 34,000 TROWOK nee ee eee ene ce tert te 170,000 185,000 Preventive maintenance .............. 135,000 95,000 Materials inspection .................- 65,000 48,000 SLCTSSUN Geeta ster ee uae aise 94,000 124 000 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.

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