The CEO of IAP is concerned with the quality of its products and the amount of resources currently spent on customer returns. The CEO would like to analyze the costs incurred in conjunction with the quality of the product.

The following information was collected from various departments within the company:

1. Prepare a costs of quality report. In addition to listing the costs by category, determine the percentage of the total costs of quality incurred in each cost category.
2. Do any additional subjective costs appear to be missing from the report?
3. What can be learned from the report?

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Warranty returns......... Training personnel $120,000 10,000 Litigation on product liability claims.......... 175,000 Inspecting 10% of final products...... 5,000 Rework...... 10,000 Production loss due to machine breakdowns...... 45,000 Inspection of raw materials 5,000