Terrel Grimes wishes to implement a quality cost program at each Greasy Grimes service center. His goal is to reduce total quality costs by 30% over the next five years, but he does not fully understand how quality costs are classified.

Required Provide examples of each type of quality cost (internal failure, external failure, appraisal, and prevention) that Grimes may expect to incur at his service centers.

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DY PROBLEM Corporate managers at Greasy Grimes began collecting data from each service center to analyze material price and quantity vari- ances. Some managers are concerned that too much is being paid for materials and too many materials are being used in conducting repairs. Managers collected quantity data from the past 12 months to use as a comparison with the variance figures for July of the current year: