Here are cost items from Huskie Company's accounts for a typical month Problem 14-1 Costs of quality (L.O. 2, 3) Inspection at the end of the production process Cost of returned goods Design work to improve the way products are made Repairs to satisfy customer complaints Employee training Incoming materials inspection Scrap $80,000 36,000 48,000 20,000 24,000 20,000 36,000 490 FINANCIAL AND MANAGERIAL ACCOUNTING: KEY PRINCIPLES MADE EASY REQUIRED Classify these items into prevention costs, appraisal costs, intern failure costs, and external failure costs Suppose Huskie Company could spend an additional $40,000 per month on design work to improve the way products are made, and thereby reduce internal failure and external failure costs by 30 percent each per month. (Appraisal costs would not be affected.) Would this be a wise thing for Huskie Company to do? Give two examples of additional nonfinancial quality measures that Huskie Company could use to help improve quality. (Hint: See Illustration 14.3.) a. b. c