Exercise $19\mathrm{.}7($Algo$)$ Cost of Quality $($LO$19-7,$ LO$19-8)$

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 $ $250,000$

Cost of goods sold $140,000$

Warranty expense $18,000$

Inspection costs $14,000$

Scrap and rework $8,100$

Product returns due to defects $6,000$

Depreciation expense $10,000$

Machine maintenance expense $3,500$

Wage expense $35,000$

Machine breakdown costs $4,000$

Estimated lost sales due to poor quality $5,000$

a$.$ Classify each of these 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?