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Part 2 Reading Inc. Produces tablets. Bel 40200 Of the total produced: low is production information: Tablets Produced 1,000 tablets Defective by quality appraisers 800 tablets Of the defective units these were reworked and sold through normal process and original sales price 200 tablets Sold as is as seconds without rework Tablets are sold with a 2-year warranty. Seconds have a 6-month warranty. The company spent the following on these quality costs: $40,000 $200,000 Total Selling and Administrative Exp Below is the Income statement: Regular sales Sales of Seconds Cost of Goods sold: Gross margin Selling and Administrative expenses Income before taxes Required: Prevention cost Appraisal cost enses are all fixed costs Reading Inc. Income Statement For year ended December 31 14,000,000 60,000 14,060,000 Original production costs 3,200,000 Rework costs 24,000 Prevention and appraisal costs 240,000 3,464,000 10,596,000 2,000,000 8,596,000 2,000,000 Included in the Total selling and administrative expenses is Show your work by providing labels and cell referencing, so | can determine how you are coming up with the answer. Compute the total profit lost by Reading Inc. by selling defective units as seconds rather than reworking them and selling them at regular price. Compute the company's total internal failure cost for the year. Compute the company's total quality cost for the year. You need to list the 4 types of quality cost categories and then provide the total. s 2. 3. Compute the company's total external failure cost for the year. 4. 5. Prepare a pie chart showing the make up of total quality costs of the 4 types of quality costs. Include labels of the quality costs with percentages. 6. Review the information provided and the income statement. Explain what is missing from the income statement in respect to the quality costs and how the missing quality cost should be reflected on the income statement and balance sheet. Explain what type of quality cost the missing cost is and your rationale for the classification . Solution: $400,000 Cost of customer complaint center