Management at Precise Manufacturing would like to analyze quality costs associated with the manufacturing process. In Year 1, Precise implemented a statistical process control system. In Year 2, further steps were taken in an effort to improve quality and focus on customer satisfaction. These included the addition of inspectors, expansion of statistical process control to additional processing steps, and further development of products through quality engineering. The benefits of the quality focus at Precise are apparent, as warranty costs and customer returns have declined since quality programs were implemented. However, total quality costs continue to be significant, and management is concerned that the quality focus has not reduced total costs, but has simply shifted costs from one area to another. Accordingly, management would like to analyze quality costs for the past two years. Precise had sales of \(\$ 18,000,000\) in both Year 2 and Year 1 , and incurred the following costs related to quality control during those years:

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A. Categorize the costs and compute the total costs of conformance for each year by category.
B. Evaluate the distribution of quality costs at Precise. Discuss the distribution of quality costs and any trends in cost distribution. What effect does the distribution of quality costs have on total quality at Precise? Explain your answer.
C. What future trends should Precise expect if the current focus of quality programs continues? Explain your answer.

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Inspection Quality engineering Quality training programs Customer allowances $ 61,000 Year 2 Year 1 $ 30,000 57,000 12,000 26,000 39,000 22,000 104,000 Scrap, net 25,000 8,000 Product testing 92,000 42,000 Rework 130,000 68,000 Statistical process control 50,000 34,000 Downtime due to defects 25,000 18,000 Warranty repairs 75,000 189,000 Field service Testing supplies 45,000 143,000 15,000 16,000