Industrial Technologies, Inc. (ITI), produces two compression machines that are popular with manufacturers of plastics: no. 165 and no. 172. Machine no. 165 has an average selling price of $30,600, whereas no. 172 typically sells for approximately $28,100. The company is very concerned about quality and has provided the following information:

	No. 165			No. 172
Number of machines produced and sold		180			220
Warranty costs:
Average repair cost per unit	$	930		$	360
Percentage of units needing repair		60	%		10	%
Reliability engineering at $180 per hour		1,615	hours		2,030	hours
Rework at ITI's manufacturing plant:
Average rework cost per unit	$	1,930		$	1,610
Percentage of units needing rework		40	%		20	%
Manufacturing inspection at $40 per hour		315	hours		510	hours
Transportation costs to customer sites to fix problems	$	29,800		$	15,600
Quality training for employees	$	35,600		$	50,300

Required:

1.	Classify the preceding costs as prevention, appraisal, internal failure, or external failure.

warranty costs

reliability engineering

rework at iti's manufacturing plant

manufacturing inspection

transportation costs to customer sites

quality training for employees

2.

Using the classifications in part (1), compute ITI's quality costs for machine no. 165 in dollars and as a percentage of sales revenues. Also calculate prevention, appraisal, internal failure, and external failure costs as a percentage of total quality costs. (Round "Percentage of total quality costs" to 2 decimal places. Total may not be equal to 100% due to rounding.)

	Dollars	Percentage of Sales
Prevention Cost
Total			%
Appraisal Cost			%
Internal Failure Cost			%
External Failure Cost
Total			%
Total Quality costs			%

	Dollars	Percentage of Total Quality Costs
Prevention			%
Appraisal			%
Internal Failure			%
External Failure			%
Total

3.

Using the classifications in part (1), compute ITI's quality costs for machine no. 172 in dollars and as a percentage of sales revenues. Also calculate prevention, appraisal, internal failure, and external failure costs as a percentage of total quality costs. (Round "Percentage of total quality costs" to 2 decimal places. Total may not be equal to 100% due to rounding.)

	Dollars	Percentage of Sales
Prevention Cost
Total			%
Appraisal Cost			%
Internal Failure Cost			%
External Failure Cost
Total			%
Total Quality costs			%

	Dollars	Percentage of Total Quality Costs
Prevention			%
Appraisal			%
Internal Failure			%
External Failure			%
Total

4.	Is the company "investing its quality expenditures differently for the two machines.
	Yes No