Electro-connect is a manufacturer of specialist computer system cables and interface devices. Three years ago it started an improvement initiative that placed a significant emphasis on 'quality right first time'. This shifted the focus of its design, production and distribution functions towards quality improvement teams. The following table (page 673) shows some budget items that relate to quality-related costs four years ago, before the initiative started, and this year, three years after the initiative started.
(a) How would you classify these budget items into the four categories of quality-related costs (appraisal, prevention, internal failure, external failure)? 

(b) In what way have the absolute costs and the proportion of spend changed? Is this as you would expect?

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Before (four years ago) Budget item Amount Replacement €120,000 costs Scrap Inspection equipment Operator training Process control stats packages Customer complaint handling €12,000 €78,000 €9000 €35,000 €90,000 Budget item Legal representation Incoming inspection Design for production project Quality teams Quality related downtime Inspector training Amount €50,000 €60,000 0 0 €68,000 €70,000 Budget item Replacement costs Scrap Operator training Inspection €36,000 equipment Process control stats After (now) Amount €69,000 packages Customer complaint handling €9500 €26,000 €68,000 €70,000 Budget item Legal representation Incoming inspection Design for production project Quality teams Quality related downtime Inspector training Amount €19,000 €12,000 €40,000 €30,000 €13,000 0