Sammy, Inc., manufactures motor scooters. Consider each of the following examples of quality costs.
_____1. Preventive maintenance on machinery.
_____2. Direct materials, direct labor, and manufacturing overhead costs incurred to rework a defective scooter that is detected in-house through inspection.
_____3. Lost profits from lost sales if company’s reputation was hurt because customers previously purchased a poor-quality scooter.
_____4. Costs of inspecting raw materials, such as chassis and wheels.
_____5. Working with suppliers to achieve on-time delivery of defect-free raw materials.
_____6. Cost of warranty repairs on a scooter that malfunctions at customer’s location.
_____7. Costs of testing durability of vinyl.
_____8. Cost to re-inspect reworked scooters.
Requirement
1. Indicate which of the following quality cost categories each example represents.
?? P Prevention costs
?? A Appraisal costs
?? IF Internal failure costs
?? EF External failure costs