Cost of quality During its first year of operations, Ridenour Company produced 79,600 electronic tablets. Of total production, 2,000 were found defective by quality appraisers. Six hundred of the defective units were reworked and sold through regular channels at the original price; the rest were sold as seconds without rework. (The uncorrected defect did not pose a hazard to customers.) The electronic tablets are sold with a two-year warranty; seconds have a six-month warranty. Ridenour Company spent $900,000 for prevention measures and $392,000 on appraisal. Following is the firm's income statement, which appropriately does not reflect any income taxes:

Ridenour Company
Income Statement
For Year Ended December 31
Regular sales	$20,488,000
Sales of seconds	112,000	$20,600,000
Cost of goods sold
Original production costs	$6,400,000
Rework costs	42,000
Prevention and appraisal costs	1,292,000	7,734,000
Gross margin		$12,866,000
Selling and administrative expenses (all fixed)		2,400,000
Net income		$10,466,000

Regular units sold totaled 78,800 and units of seconds sold totaled 800. Rework units sold totaled 1,200. a. Compute the total profit lost by Ridenour Company in its first year of operation by selling defective units as seconds rather than reworking them and selling them at the regular price. $Answer b. Compute the companys total failure cost for the year. $Answer c. Compute the companys total quality cost for the year. $Answer