1. Which of the following is an example of a cost item that should be classified as an internal failure cost?

Inspection costs

Employee training costs

Rework costs

Product return costs

2. The manager at East Coast Manufacturing organizes costs to prepare the Costs of Quality report. The manger compiled the following data:

Employee training	$161,000
Warranty costs	$185,000
Rework	$263,000
Product testing	$190,000
Cost of rejected units	$40,000
Sales return processing costs	$35,000
Lost profits from lost sales	$720,000
Inspection at state I of production	$100,000
Preventative maintence	$105,000
Improved equipment	$115,000

What of the following cost is the total cost of quality the manager should use to report the costs in the internal failure cost category?

$263,000

$303,000

$649,000

$185,000

$190,000