Charles Berkle is the manager of Nogain Manufacturing and is interested in doing a cost of quality analysis. The following cost and revenue data are available for the most recent year ended December 31.

Sales revenue	$	500,000
Cost of goods sold		272,000
Warranty expense		34,000
Inspection costs		15,000
Scrap and rework		10,600
Product returns due to defects		6,000
Depreciation expense		32,000
Machine maintenance expense		11,000
Wage expense		135,000
Machine breakdown costs		5,400
Estimated lost sales due to poor quality		10,000

a. Classify each of the above costs into the four quality cost categories and prepare a cost of quality report for Nogain.

b. What percentage of sales revenue is being spent on prevention and appraisal activities?

c. What percentage of sales revenue is being spent on internal and external failure costs?

Classify each of the above costs into the four quality cost categories and prepare a cost of quality report for Nogain.

NOGAIN MANUFACTURING
Quality Cost Report
For the Current Year Ended December 31
Prevention costs:
Machine maintenance
		$0
Appraisal costs:
		$0
Internal failure costs:
		$0
External failure costs:
		$0
Total quality costs		$0

What percentage of sales revenue is being spent on prevention and appraisal activities? (Round your answer to 1 decimal place.)

Costs as a Percentage of Sales

%

What percentage of sales revenue is being spent on internal and external failure costs? (Round your answer to 1 decimal place.)

Costs as a Percentage of Sales

%