Long-Term Performance Report Nabors Company had actual quality costs for the year ended June 30, 20x5, as given below Prevention costs: 320,000 640,000 960,000 Prototype inspection Vendor certification Total prevention costs Appraisal costs: Process acceptance 335,000 380,000 715,000 Test labor Total Appraisal costs Internal failure costs: Retesting 197,500 395,000 592,500 Rework Total internal failure costs External failure costs: Recalls 231,000 599,000 830,000 $3,097,500 Product liability Total external failure costs Total quality costs At the zero-defect state, Nabors expects to spend $400,000 on quality engineering, $80,000 on vendor certification, and $75,000 on packaging inspection. Assume sales to be $2,200,000