No. 165 No. 172 Number of machines produced and sold 80 100 Warranty costs: Average repair cost per unit $1,200 $400 Percentage of units needing repair 70% 10% Reliability engineering at $150 per hour 1,600 hours 2,000 hours Rework at ATs manufacturing plant: Average rework cost per unit $1,900 $1,600 Percentage of units needing rework 35% 25% Manufacturing inspection at $50 per hour 300 hours 500 hours Transportation costs to customer sites to fix problems $29,500 $15,000 Quality training for employees $35,000 $50,000 Requirements: 1. Classify the preceding costs as prevention, appraisal, internal failure, or external failure. 2. Using the classifications in requirement (1), compute ATs 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. 3. Repeat requirement (2) for machine no. 172. 4. Comment on your findings, noting whether the company is investing its quality expenditures differently for the two machines. 5. Quality costs can be classified as observable or hidden. What are hidden quality costs, and how do these costs differ from observable costs?