Cost of quality (COQ) analysis, nonfinancial quality measures. The Diamond Corporation manufactures and sells industrial grinders. The following table presents financial information pertaining to quality in 2018 and 2019 (in thousands):

2019 2018

Sales $12,500 $10,000

Line inspection 85 110

Scrap 175 250

Design engineering 240 100

Cost of returned goods 145 60

Product-testing equipment 50 50

Customer support 30 40

Rework costs 135 160

Preventive equipment maintenance 90 35

Product liability claims 100 200

Incoming materials inspection 40 20

Breakdown maintenance 40 90

Product-testing labour 75 220

Training 120 45

Warranty repair 200 300

Supplier evaluations 50 20

REQUIRED:

1) Classify the cost items in the table into preventive, appraisal, internal failure, or external failure categories. (4 marks)

2) Calculate the ratio of each COQ category to sales in 2018 and 2019. Comment on each on the trends in costs of quality between 2018 and 2019. (4 marks)

3) Give two examples of nonfinancial quality measurers that Diamond Corporation could monitor as part of a total quality control effort. (2 marks)